GIFT  OF 


i/e 


V  &•• 

»',     /t00L 


To  My  Friend, 

PERCY  WERNER,  ESQ. 

Whose  Criticism  Has  Greatly 
Aided  Me  In  This  Work. 


COPYRIGHT  —  1922 

BY 
WILLIAM   PRESTON   HILL 

Made  in  the  United  States  of  America 

,-> 


A   timely    inquiry    into:      The   effect    of   labor-saving 
machinery    on    production,    the    wages    of    labor, 
the    distribution    of    wealth,    and    the    source 
of     the     labor     fund;      together    'with     a 
discussion     as     to     the     sagacity     or 
short-sightedness      of      the      indi- 
vidualist and  collectivist  points 
of  view,  and  the  wrong  or 
right  road   to   progress 


By 
DR.  WM.  PRESTON  HILL 


ALBA    COMPANY 

4541   Gibson  Ave. 

St.  Louis,  Mo. 

1922 


:  :  :  C:    '    •        INTRODUCTION. 

Social  unrest  and  discontent  among  the  masses  of 
the  people  are  very  evident  today  among  all  the 
civilized  nations  of  the  world.  Many  competent 
obseivers  have  ascribed  this  to  the  great  war,  which 
unsettled  the  minds  of  multitudes  of  people  and 
strengthened  the  tendency  to  violence  and  disorder. 

But  even  before  the  war,  there  had  been  for 
many  years  a  gradual  increase  of  unrest  among  the 
workers  of  all  civilized  nations.  This  was  due  to  a 
variety  of  causes,  some  of  which  date  back  to  the 
great  French  Revolution. 

That  mighty  upheaval  was  brought  about  by  the 
intellectual  movement!  of  the  eighteenth  century 
which  had  slowly  but  surely  undermined  the  faith 
of  the  masses  of  the  people  in  revealed  religion  and 
in  the  divine  right  of  kings  and  nobles.  This  pro- 
cess had  been  going  on  for  several  generations  un- 
til it  had  completely  sapped  the  foundations  of  the 
old  feudal  system  and  it  needed  only  a  spark  to 
cause  its  overthrow. 

These  two  beliefs  were  the  moral  foundation  of 
the  old  regime  which  secured  it  unquestioning  obe- 
dience on  the  part  of  the  people  and  gave  it  that 
stability  which  comes  only  from  the  perfect  harmony 
between  social  consciousness  and  political  and  eco- 
nomic systems. 

We  must  clearly  recognize  the  fact  that  ever  since 
that  great  revolution  which  profoundly  unsettled 


INTRODUCTION  5 

the  minds  of  men,  that  stability  has  not  existed  in 
our  modern  society  and  there  has  been  a  rising  tide 
of  democracy  all  over  the  world,  and  a  constant 
agitation  of  new  ideas  of  all  kinds,  good,  bad,  or 
indifferent,  constructive  or  destructive,  judicious  or 
impracticable. 

These  ideas  now  find  eager  listeners  among  all 
the  people.  The  tremendous  development  of 
power- driven  machinery  has  concentrated  large 
masses  of  industrial  workers  in  cities.  This  has 
brought  large  numbers  of  them  into  daily  contact 
with  each  other  where  they  can  discuss  the  prob- 
lems of  the  day.  It  has  increased  their  mental  alert- 
ness, improved  their  education,  facilitated  their  ac- 
cess to  sources  of  information,  enabled  them  to  form 
effective  unions  and  fraternal  societies  to  protect 
their  interests  and  increase  their  solidarity  and, 
above  all,  has  multiplied  production  many  fold, 
which  as  a  natural  consequence  has  also  greatly 
increased  wages. 

All  these  factors  combined  have  considerably  in- 
creased the  social  influence  and  political  power  of 
the  masses  of  the  people,  but  it  has  also  filled  them 
with  new  ambitions  and  new  desires  and  has  opened 
their  ears  to  the  whisperings  of  discontent  and  the 
grotesque  flattery  of  demagogues. 

Coincident  with  this,  there  has  been  a  concen- 
tration of  enormous  wealth  in  the  hands  of  a  few 
and  an  increase  in  the  class  of  the  idle  rich  enjoying 

522*48 


6  INTRODUCTION 

unearned  incomes  who  have  not  always  used  their 
good  fortune  with  moderation,  dignity,  or  good 
sense. 

All  this  seems  unfair  to  those  whose  shoulders 
bear  the  brunt  of  industry  and  who  contribute  real 
toil  for  the  wages  which  they  receive  out  of  pro- 
duction. 

It  was  easy  therefore  for  agitators  to  point  out 
that  there  are  special  privileges  in  our  present  eco- 
nomic system  which  discriminate  against  the  pro- 
ducing masses  and  that  the  workers  could  by  acting 
collectively  abolish  these  and  thereby  increase  their 
own  prosperity.  Also  they  could  secure  for  them- 
selves the  full  product  of  their  labor  by  having  the 
state  controlled  by  them,  own  and  operate  all  the 
means  of  production  and  distribution.  This  pro- 
gram is  attractive  and  has  considerably  fanned  the 
smoldering  embers  of  discontent.  It  is  a  part  of 
the  thought  in  the  background  of  much  of  our  in- 
dustrial warfare. 

f  This  presents  a  real  danger  today  which  cannot 
be  lightly  cast  aside.  It  is  extremely  foolish  for  us 
to  attempt  to  ignore  these  changed  conditions.  Judg- 
ing from  the  widespread  social  unrest,  our  period 
must  be  regarded  as  one  of  change  and  it  is  inevi- 
table that  considerable  readjustment  must  take  place 
in  our  institutions  before  we  reach  that  complete 
harmony  between  the  social  consciousness  of  our 
people  and  the  established  order,  which  is  required 
to  produce  stability. 


INTRODUCTION  7 

The  question  is,  in  what  direction  shall  the  read- 
justment take  place?  When  we  consider  the  tre- 
mendous importance  of  the  issues  at  stake  and  the 
immense  mass  of  human  happiness  or  misery  de- 
pending on  a  right  solution  of  them,  even  the  most 
careless  thinker  will  perceive  the  necessity  of  not 
jumping  at  any  hasty  conclusion. 

Every  true  man  owes  it  to  himself  and  his  chil- 
dren to  study  this  question  without!  prejudice  one 
way  or  the  other  and  to  get  at  the  facts  as  near  as 
possible.  Arguments  that  are  not  sustained  by  the 
facts-  are  mere  rhetoric  and  amount  to  nothing  what- 
ever. We  want  the  facts  and  in  this  treatise  I  have 
endeavored  to  present  authentic  facts  and  figures 
and  to  quote  the  references  where  they  can  be  seen 
an.d  let  the  reader  form  his  own  conclusions. 

We  have  been  too  careless  in  the  past  in  accept- 
ing plausible  eloquence  as  the  truth.  This  is  a  mis- 
take. 

It  is  easy  enough  to  criticize  the  existing  order 
of  society;  cur  institutions  in  actual  operation  on  a 
large  scale  are  before  us  and  we  have  grown  fa- 
miliar with  them  and  easily  recognize  defects  which 
develop  from  time  to  time  and  which  have  to  be 
corrected,  to  meet  changing  conditions. 

But  how  to  do  this,  presents  a  much  more  difficult 
problem.  What  direction  shall  the  remedy  take? 
Shall  it  be  towards  greater  collectivism  or  towards 
greater  freedom  of  individuality?  In  what  direction 
do  the  interests  of  the  working  classes  lie? 


8  INTRODUCTION 

Can  these  defects  be  best  eradicated  by  the  com- 
plete overthrow  of  the  present  structure  of  society? 

We  must  find  out,  first,  whether  the  present  sys- 
tem has  such  fundamental  defects  that  it  is  unwork- 
able without  great  detriment  to  the  masses  of  the 
people.  Second,  we  must  find  out  whether  we  can- 
not remedy  these  defects  by  the  procedure  provided 
by  the  present  system  of  government  for  such 
changes. 

Third,  we  must  know  exactly  what  we  are  going 
to  put  into  its  place.  We  must  thoroly  satisfy  our- 
selves that  the  new  system  has  advantages  which 
justify  the  change  and  is  itself  free  from  other  de- 
fects perhaps  just  as  bad. 

In  short,  before  overturning  the  present  system 
we  must  test  the  new  system  with  the  facts  avail- 
able before  us. 

The  history  of  revolutions  in  other  countries  and 
recently  in  Russia  has  convinced  every  thoughtful 
man  that  no  matter  how  justified  a  revolution  may 
be  at  the  time,  it  is  nevertheless  a  mighty  convul- 
sion and  for  the  time  being  at  least  brings  a  whole 
nation  face  to  face  with  appalling  ruin  and  misery 
in  which  millions  of  people  are  sure  to  perish. 

We  cannot  afford  therefore  in  a  matter  of  such 
tremendous  consequences  to  make  any  mistake  that 
can  possibly  be  avoided  by  a  careful  examination 
of  the  facts  beforehand. 

Moreover,  history  has  clearly  demonstrated  that 
until  a  fundamental  change  takes  place  in  the  minds 


INTRODUCTION  91 

of  the  people,  any  progress  can  be  no  more  than 
temporary  and  superficial  and  therefore  a  forcible 
revolution  would  prove  to  be  not  only  premature 
but  useless.  Progress  may  seem  too  slow  to  suit 
many  impatient  minds,  but  to  be  permanent  it  has 
to  be  sustained  by  the  public  opinion  of  the  great 
masses  of  a  nation  and  this  changes  very  slowly. 

Moreover,  we  know  by  experience  that  in  the  long 
run,  in  spite  of  all  obstacles,  public  opinion  does 
prevail  and  the  ideas  of  one  age  become  the  law 
of  the  next.  Our  present  system  of  law  is  the  out- 
growth of  the  conception  of  right  and  justice  which 
prevailed  among  our  ancestors  and  there  is  no  doubt 
whatever  that  the  general  ideas  of  equity  of  the 
present  generation  will  become  the  law  of  the  next. 

It  is  a  certainty,  capable  of  demonstration,  that 
if  any  considerable  modification  of  the  existing 
ideas  of  equity  should  take  place  among  the  peo- 
ple of  a  nation,  it  would  only  be  a  question  of  time 
until  that  change  would  be  reflected  in  their  laws. 
Our  present  system  of  law  is  the  basis  of  the  estab- 
lished order  now,  but  the  law  of  the  future  is  even 
now  being  created  in  our  very  midst  by  the  prevail- 
ing ideas  which  recommend  themselves  to  the  gen- 
eral mass  of  our  people  at  present. 

No  matter  how  irrational,  impracticable  or  incon- 
sistent some  of  these  ideas  may  seem  to  some  of  us, 
they  are  nevertheless  a  real  force  to  be  reckoned 
with  and  which  may  prove  irresistible  in  the  future. 


•10  INTRODUCTION 

It  is  important  therefore  that  full  and  free  dis- 
cussion shall  take  place  on  these  subjects,  in  order 
that  true  education  shall  be  obtained  and  sound 
opinions  formed.  False  ideas  must  be  met  in  their 
own  field  of  thought  and  confronted  with  the  facts. 
It  is  a  profound  mistake  to  believe  that  they  can 
be  suppressed  by  force,  policemen's  clubs  or  jail 
sentences.  Force  is  powerless  against  an  idea.  It 
only  advertises  it.  Ideas  can  only  be  overcome  by 
other  ideas  more  truthful  and  rational.  This  is  the 
reason  for  this  treatise.  I  have  considered  it  my 
duty  to  contribute  to  the  best  of  my  ability  to  clear 
up  these  ideas. 

In  discussing  the  question  of  Socialism  vs.  Indi- 
vidualism, the  first  question  that  arises  is,  what 
is  socialism?  How  do  we  define  it?  This  is  a 
question  difficult  to  answer,  because  socialism  is  a 
general  term  which  embraces  widely  conflicting 
views. 

Broadly  speaking,  however,  we  can  say  that  so- 
cialism is  the  opposite  to  individualism.  Socialism 
means  the  abolition  of  the  individual  private  owner- 
ship of  property  and  replacing  it  with  the  common 
ownership  of  property  by  having  the  title  of  all 
property  vested  in  the  state.  It  means  a  great  in- 
crease of  collective  action  by  which  the  state  will 
own  and  operate  all  the  means  of  production,  dis- 
tribution and  exchange,  thus  subordinating  individ- 
ual action  almost  entirely  to  the  mass  action  of  the 
whole  people. 


INTRODUCTION  11 

The  central  idea  is  that  the  people  shall  seek 
their  welfare  by  collective  rather  than  by  individual 
action.  The  means  to  accomplish  this  is,  that  the 
working  people  shall  by  collective  action  take  pos- 
session of  the  Government,  establish  their  own  dic- 
tatorship and  use  the  power  of  Government  thus 
acquired  to  accomplish  their  ends.  The  chief  of 
which  is  predicated  on  the  proposition  "that  all 
wealth  is  produced  by  labor  and  therefore  should 
belong  only  to  those  who  toil  in  its  production  and 
that  the  worker  shall  receive  as  wages  the  full  prod- 
uct of  his  labor  without  any  profit  being  deducted 
from  it  by  anyone." 

There  are  numerous  shades  of  opinion  among 
those  classed  as  socialists  differing  from  each  other 
in  some  detail. 

To  discuss  socialism  broadly  it  is  necessary  to 
begin  with  Karl  Marx  because  all  socialists  until 
very  recently  have  been)  directly  or  indirectly  his 
followers  and  have  based  themselves  on  his  teach- 
ing. 

When  I  began  writing  this  treatise,  I  was  imbued 
with  many  radical  ideas  and  I  felt  impelled  to  dem- 
onstrate their  truth.  But  when  I  came  to  dig  into 
the  facts  I  was  much  surprised  to  find  them  quite 
different  from  what  I  had  believed  them  to  be. 
Facts  are  stubborn  things  which  cannot  be  ignored 
and  will  not  down  at  our  bidding.  Loyalty  to  the 


12  INTRODUCTION 

truth  makes  it  my  duty  to  give  the  results  of  these 
researches  to  the  public. 

WM.  PRESTON  HILL, 
4541  Gibson  Ave.,  St.  Louis,  Mo. 

The  great  English  scientist,  Thomas  Huxley, 
said:  "Sit  down  before  a  fact  like  a  little  child;  be 
prepared  to  give  up  every  preconceived  notion;  fol- 
low it  wherever  or  to  whatever  it  may  lead  you — or 
you  shall  learn  nothing/* 


CHAPTER  L 
KARL  MARX,  THE  FOUNDER  OF  SOCIALISM. 

Karl  Marx  in  collaboration  with  Engels  may  be 
called  the  founder  of  "the  International  socialist 
movement,"  and  his  work  "Capital"  has  become 
the  bible  of  the  socialists.  I  say  bible  because  mul- 
titudes have  accepted  it  with  a  sort  of  semi-religious 
exaltation.  In  that  state  of  mind,  faith  is  the  con- 
trolling emotion  and  reason  is  not  active. 

The  general  impression  of  his  followeis  is  thaf 
Marx  was  the  creator  of  his  ideas  and  a  sort  of  in- 
spired prophet.  This  sentiment  has  been  best  ex- 
pressed by  Achille  Loria,  professor  of  political  econ- 
omy at  the  University  of  Turin,  and  the  foremost 
protagonist  of  socialism  in  Italy.  In  his  work  on 
Marx  he  says:  "Whatever  judgment  we  may  feel 
it  necessary  to  pass  upon  the  doctrines  it  enunciates 
it  will  remain  for  all  time  one  of  the  loftiest  sum- 
mits ever  climbed  by  human  thought;  one  of  the 
imperishable  monuments  to  the  creative  powers  of 
the  human  mind." 

To  any  serious  student  this  statement  can  only 
appear  to  be  a  wild  exaggeration.  The  truth  is 
that  Marx  showed  little  creative  power  of  his  own, 
because  few  of  his  ideas  were  original  with  him. 
Most  of  the  ideas  set  forth  in  his  "Capital"  or 
in  any  of  his  other  works  were  discussed  at  length 


14  SHADOW    OR    SUBSTANCE 

by  :  writers  who  preceded  Marx  many  years,  even 
back  as  far  as  Plato,  especially  by  the  English  writers 
Godwin,  Hall,  Thompson  and  Hodgskin.  Even  his 
much-discussed  theory  of  surplus  value  was  origi- 
nated by  William  Thompson  and  thoroly  elucidated 
in  his  book*  published  in  1824,  when  Marx  was 
only  6  years  old. 

In  some  of  his  earlier  works  Marx  mentions  these 
English  writers  and  shows  that  he  was  fully  ac- 
quainted with  their  works;  but  in  his  "Capital"  he 
does  not  give  them  credit  for  the  ideas  he  bor- 
rowed from  them. 

Moreover,  Marx  when  he  was  30  years  old  in 
January,  1  848,  in  collaboration  with  Engels  issued 
the  famous  "Communist  Manifesto."  Engels  had 
been  in  business  in  Manchester  where  he  had  become 
acquainted  with  the  English  socialist  writers,  had  in 
the  main  adopted  their  doctrines,  and  of  course  he 
must  have  acquainted!  Marx  with  them  in  writing 
the  manifesto. 

Marx  spent  all  the  balance  of  his  life,  up  to  the 
time  of  his  death  35  years  later,  in  writing  his  prin- 
cipal book,  "Capital,"  and  left  it  unfinished  at  his 
death. 

Comparing  it  with  the  "Communist  Manifesto," 
we  find  that  altho  "Capital"  contains  an  immense 

•Inquiry  ii>to  the  Principles  of  *the  Distribution  of  Wealth 
most  Conducive  to  Human  Happiness,  by  William  Thompson, 
jLongman  &  Co. — London,  1824. 


SOCIALISM  OR  INDIVIDUALISM  15 

mass  of  details  more  or  less  relevant  not  contained 
in  the  Manifesto,  yet  the  latter  contains  all  the  essen- 
tial principles  contained  in  the  former  except  one, 
the  theory  of  surplus  value. 

"Capital"  only  gave  those  ideas  more  body  and 
weight  by  multiplying  examples  and  illustrations. 
So  that  in  35  years  Marx  only  added  one  idea, 
which  he  found  good  and  borrowed  from  William 
Thompson's  work,  to  the  ideas  he  had  at  30  years  ot 
age.  Most  of  his  time  for  35  years  was  spent  in  the 
British  Museum  patiently  and  laboriously  digging 
up  facts  to  strengthen  his  indictment  against  the  ex- 
isting order  of  society.  The  conclusion  is  frresistible 
that  Marx  formed  his  ideas  when  he  was  a  young 
man  and  spent  all  the  balance  of  his  life,  not  to 
learn  anything  new  or  to  discover  the  truth  but  sim- 
ply to  dig  up  facts  to  strengthen  the  opinions  he 
already  held  and  to  prove  his  case. 

But  nevertheless  Marx  and  Engels  for  the  first 
time  assembled  a  compact,  coherent  body  of  social- 
ist doctrine  sufficiently  plausible  to  dominate  the 
minds  of  multitudes  of  men,  and  issued  it  just  at 
the  right  moment,  in  January,  1  848,  only  a  month 
before  the  revolution  broke  out  in  Paris.  They  thus 
became  the  founders  of  the  modern  socialist  move- 
ment and  Marx  with  his  "Capital"  became  its 
prophet. 

"Capital"  is  almost  entirely  a  terrific  indictment 
of  the  institutions  existing  at  the  time  Marx  began 


16  SHADOW    OR    SUBSTANCE 

its  writing  in  the  early  days  of  power-driven  ma- 
chinery with  its  extreme  and  irresponsible  individ- 
ualism. 

Marx  devotes  page  after  page,  chapter  after  chap- 
ter of  almost  the  entire  book  to  the  facts  he  ac- 
cumulated to  prove  that  what  he  calls  "Capitalism" 
is  damnable.  It  is  this  constant  repetition  over  and 
over  again  which  exercises  its  hypnotic  spell  on  the 
minds  of  its  readers  and  goads  them  into  fury  until 
finally  they  are  in  a  frame  of  mind  to  say,  "Away 
with  this  horror,  we  are  ready  to  accept  anything 
in  its  place/ 

Out  of  this  interminable  mass  of  horrible  exam- 
ples, Marx  scarcely  condescends  to  devote  a  few 
paragraphs  to  prove  that  socialism  would  be  a  good 
thing  for  the  new  order  of  society.  He  assumes  the 
role  of  a  prophet  and  predicts  that  socialism  must 
come  inevitably,  good  or  bad.  whether  the  people 
want  it  or  not. 

He  prophesies  that  capitalism  will  break  down 
by  the  sheer  force  of  its  own  evils,  and  that  then 
socialism  will  rise  up  in  its  place  just  as  the  butter- 
fly, at  a  certain  stage  of  its  development,  emerges 
from  the  debris  of  its  previous  existence  as  a  chyrs- 
alis. 

The  Materialistic  Interpretation  of  History. 

His  prediction  is  founded  on  what  he  calls  the 
"Materialistic  Interpretation  of  History,"  by  which 
he  seeks  to  show  that  the  origin  of  all  our  ideas, 


SOCIALISM  OR  INDIVIDUALISM  17 

philosophies,  laws,  institutions  and  even  religions 
can  be  traced  to  the  material  economic  conditions 
in  which  th^  people  have  lived. 

This  is  a  generalization  much  too  broad  to  stand 
the  test  of  scrutiny  and  reason.  No  doubt  the  eco- 
nomic conditions  have  had  considerable  influence 
in  shaping  our  laws  and  institutions,  but  on  the  con- 
trary it  can  with  equal  truth  be  said  that  ethical  ideas 
and  religions  have  also  had  a  profound  influence 
in  shaping  the  economic  structure  of  society.  It  is 
in  the  domain  of  thought  that  the  change'  first  takes 
place  which  determines  what  the  future  society 
shall  be. 

It  was  the  advent  of  the  new  religion,  Christian- 
ity, which  at  first  made  its  way  slowly  among  the 
slaves,  the  lowly  and  the  oppressed,  which  over- 
threw the  old  pagan  society  and  determined  the 
future  of  the  Roman  world. 

It  was  the  ethical  teachings  of  Confucius  and 
Laotsze,  2000  years  ago  which  determined  the  fu- 
ture structure  of  China. 

It  was  the  religion  of  Mahomet  that  shaped  the 
destinies  of  the  greater  part  of  Africa,  Asia  Minor 
and  Hindustan. 

And  finally,  it  was  not  the  economic  conditions 
of  the  Middle  ages  which  produced  the  reformation, 
but  on  the  contrary  it  was  that  intellectual  revolt 
which  was  the  real  creator  of  our  modern  conditions. 


18  SHADOW  OR  SUBSTANCE 

Whatever  opinions  one  may  entertain  of  Luther's 
doctrine,  I  think  that  every  one  will  agree  that,  when 
he  nailed  his  thesis  on  the  door  of  the  church,  he 
started  something  which  profoundly  altered  the  in- 
stitutions of  Europe. 

Marx  showed  a  strong  inclination  to  prophesy 
in  his  book  and  there  is  no  doubt  that  he  sincerely 
believed  that  all  the  phenomena  of  human  society 
could  be  grasped  and  the  future  predicted  like  a 
simple  mathematical  equation,  but  time  has  demon- 
strated that  he  was  wrong  both  in  his  premises  and 
conclusions.  He  was  a  false  prophet  who  predicted 
many  things,  none  of  which  have  ever  happened  in 
the  way  he  expected. 

The  Law  of  the  Concentration  of  Capital. 

He  announced  this  law,  and  basing  himself  on 
that,  he  predicted  that  capital  would  concentrate 
;fr«elf  in  constantly  fewer  hands,  that  the  number  of 
capitalists  must  diminish  as  the  magnitude  of  enter- 
prises increased,  that  the  smaller  capitalists  would  be 
continually  broken  and  driven  into  the  ranks  of  the 
proletariat,  until,  in  the  course  of  time  there  would 
be  numerically  only  a  few  large  capitalists  left  on 
the  one  hand  against  the  great  mass  of  the  working 
class  on  the  other.  He  predicted  that  the  same 
process  would  take  place  in  land  ownership. 

All  these  arguments  Marx  founded  on  the  sup- 
posed "iron  law  of  wages*'  which  he  accepted  from 
Ricardo,  the  English  economist,  as  the  gospel  truth, 


SOCIALISM  OR  INDIVIDUALISM  19 

out  which  time  has  demonstrated  to  be  false  and 
which  has  been  discarded  by  all  leading  economists 
today  as  untenable. 

It  is  true  that  big  businesses  have  grown  bigger, 
but  yet  the  number  of  shareholders  in  them  has 
continually  increased  instead  of  diminishing.  More- 
over, the  number  of  smaller  firms,  instead  of  being 
wiped  out,  has  also  increased  enormously  and  new 
ones  are  being  added  every  day. 

So  that  the  actual  number  of  capitalists  has  mul- 
tiplied many  hundred  times  instead  of  dwindling 
to  a  few  as  Marx  predicted.  Also  the  wage  earn- 
ers who  were,  according  to  Marx,  going  to  remain 
inevitably  at  the  bare  level  of  subsistence  and  even 
sink  lower  and  lower,  have  instead  benefited  greatly 
by  the  general  increase  of  wealth,  and  their  wages 
and  general  well  being  have  been  enormously  im- 
proved. So  that  many  classes  of  workers  have  in- 
comes greater  than  most  teachers,  preachers,  pro- 
fessors, lawyers,  bookkeepers,  clerks,  etc.,  and  con- 
sider themselves  well  off,  by  comparison. 

The  Law  of  Class  Conflict. 

Marx  also  announced  this  law,  by  which  he 
claimed  that  the  economic  interests  of  the  work- 
ing classes  were  sharply  opposed  to  that  of 
the  capitalist  class,  and  he  predicted  that  this  would 
continually  become  more  and  more  pronounced  un 
til  every  man  would  be  either  wholly  the  one  or 
wholly  the  other.  He  claimed  that  the  working 


20  SHADOW    OR    SUBSTANCE 

class,  overwhelming  in  numbers,  would  be  forced 
by  the  imperative  urge  of  their  economic  class  in- 
terests, to  combine,  first  locally,  then  nationally, 
then  internationally.  Then  Marx  said  they  will  be 
victorious.  Nationalities  will  disappear.  The  work- 
ers will  then  decree  that  all  land  and  capital  shall 
be  owned  in  common  (to-wit:  All  private  proper- 
ty shall  be  confiscated  by  the  state).  There  will 
then  be  only  one  class  left  in  the  world,  the  working 
class,  and  all  men  will  then  be  (like  the  heroes  in 
a  novel)  happy  and  free  forevermore.  This  is  his 
vision  of  Utopia.  I  believe  that  we  can  easily  dem- 
onstrate that  in  the  socialist  state  men  will  be  neither 
free  nor  equal,  and  that  they  will  be  actually  less 
free  and  less  equal  than  they  are  under  the  present 
system. 

Marx  did  not  prophesy  correctly  in  this  respect. 
The  sharpness  of  the  class  warfare,  far  from  increas- 
ing, has  not  been  even  maintained  and  has  tended 
to  diminish.  There  is  no  clear-cut  line  of  division 
between  capitalists  who  have  everything  and  work- 
ers who  have  nothing.  There  are  many  intermediate 
classes  between  the  very  rich  and  the  poor.  There 
are  hundreds  of  thousands  of  small  employers, 
store-keepers,  etc.,  who  are  not  capitalists  to  any 
extent,  neither  do  they  belong  to  the  working  class 
altho  they  work,  and  there  are  other  thousands  of 
workers  who  are  to  some  extent  capitalists  or  own 
their  own  home  or  other  property,  and  thousands 


SOCIALISM  OR  INDIVIDUALISM  21 

of  others  who  own  some  landed  property  or  farms 
who  cannot  be  classed  as  either  capitalists  or  pro- 
letarians. Altogether  it  is  impossible  to  divide  the 
people  into  two  sharply  distinct  groups. 

Even  in  Germany,  where  Marx's  theories  found 
the  most  adherents,  the  enormous  and  general  in- 
crease of  wealth  just  before  the  war  among  all 
classes  of  the  people  compelled  his  followers  to  re- 
vise their  belief  in  this  part  of  his  prophecy. 

Moreover,  nowhere  has  nationalism  tended  to 
give  way  to  internationalism  among  the  workers, 
as  the  late  war  has  shown  conclusively.  And  it  is 
precisely  in  the  countries  with  the  greatest  develop- 
ment of  capital  that  the  workers  command  the 
highest  wages  and  the  general  mass  of  the  people 
enjoy  much  greater  and  more  general  well-being 
than  in  the  countries  with  less  capitalism.  It  is  rea- 
sonable to  believe  that  the  still  further  development 
of  capital,  in  any  nation,  will  still  further  increase 
the  general  welfare  therein. 

Therefore  capitalism  is  in  no  danger  of  breaking 
down  of  its  own  weight,  and  when  socialism  came 
accidentally,  it  came  into  Russia,  the  least  devel- 
oped capitalist  country,  and  as  a  result  of  the  com- 
plete break-down  of  all  civilization  due  to  the  war, 
and  not  as  a  result  of  the  high  development  of  cap- 
italism. 


22  SHADOW  OR  SUBSTANCE 

The  Advent  of  Communism  in  Russia. 

Finally,  when  communism  triumphed  in  Russia,  it 
was  not  due  to  the  over  development  of  capital, 
but  actually  to  the  destruction  of  it  and  the  complete 
collapse  of  their  economic  life  due  to  the  terrible 
strain  of  the  war.  Communism  followed  in  the 
wake  of  the  war  even  as  those  other  twin  scourges 
of  the  human  race,  famine  and  pestilence,  have 
always  followed  it,  and  for  the  selfsame  reasons. 
And  communism,  far  from  restoring  the  economic 
life  of  the  nation  and  bringing  back  prosperity  and 
happiness  to  its  people,  has  actually  fanned  the 
flames  of  pestilence  and  famine  into  a  mighty  con- 
flagration in  which  millions  of  people  are  even  now 
perishing. 

It  has  aggravated  the  ordinary  distress  usual 
after  a  war  into  an  appalling  catastrophe,  and  it 
has  done  it  for  the  reasons  I  shall  point  out  and 
which  could  have  been  easily  predicted  by  any 
thoughtful  man  and  which  were  in  fact  actually  pre- 
dicted by  several  great  writers  long  ago;  notably 
by  Pierre  Joseph  Proudhon,  a  French  philosopher 
and  writer  of  great  originality,  in  his  *  "Resume  of 
the  Social  Question'*  and  in  his  "General  Idea  of 
the  Revolution  of  the  Nineteenth  Century ;**  also 
by  Herbert  Spencer,  the  renowned  English  philos- 
opher, in  his  "Coming  Slavery,'*  and  by  Frederick 
Mathews,  an  English  writer,  in  his  'Taxation  and 
the  Distribution  of  Wealth,*'  published  just  before 
the  war. 


CHAPTER  II. 
COMMUNISM. 

After  his  terrible  indictment  of  capitalism  Marx 
offers  us  a  remedy.  He  said  his  program  can  be 
stated  in  a  single  sentence: 

The  dictatorship  of  the  proletariat,  abolition  of 
private  property  and  communism. 

Many  people  believe  that  there  is  considerable 
difference  between  bolshevism,  communism  and  so- 
cialism and  that  socialism,  for  instance,  does  not 
aim  at  complete  communal  ownership  and  operation 
of  all  property. 

It  is  true,  that  there  are  very  many  different 
shades  of  opinion  among  socialists  on  this  subject, 
and  that  there  are  some  of  them  who  only  advo- 
cate that  the  state  shall  own  and  operate  the  most 
important  means  of  production  and  distribution 
with  which  the  great  mass  of  the  people  come  into 
contact,  and  shall  leave  a  considerable  amount  of 
private  property  in  individual  ownership. 

And  there  are  wry  many  others  who  have  no 
sharply  defined  and  clear  cut  ideas  on  this  ques- 
tion and  simply  deceive  themselves  and  others  with 
hazy,  indefinite  notions  and  assertions. 

But  Marx  himself  had  no  illusions  on  this  point. 
He  knew,  as  everybody  who  has  studied  the  ques- 


24  SHADOW    OR    SUBSTANCE 

tion  fundamentally  knows,  that  it  is  impossible  to 
confiscate  the  major  part  of  all  the  property  of  a 
nation  and  at  the  same  time  leave  here  and  there 
scattered  portions  of  it  in  private  hands. 

Two  Systems  of  Property  Ownership. 

Speaking  fundamentally  and  on  broad  general 
lines,  there  are  only  two  great  systems  of  property 
ownership  possible.  First,  ownership  by  individ- 
uals; and  second,  communal  ownership  by  the  state, 
community,  municipality,  group  or  tribe. 

The  system  of  property  ownership  which  now 
prevails  in  all  the  civilized  nations  (except  Russia 
under  bolshevism),  is  the  ownership  of  property  by 
individuals,  with  the  occupation,  operation  and  use 
of  the  same  by  individuals.  It  is  well  for  readers 
to  keep  this  definition  in  mind'  and  to  grasp  its  full 
meaning,  because  much  of  the  discussion  of  this 
subject  hinges  on  that  point  and  is  made  simple  by 
a  clear  understanding  of  this  fundamental. 

I  am  aware  that  even  under  the  present  system 
we  have  invented  ways  by  which  several  individ- 
uals can  own  a  piece  a  property  together,  as  when 
several  persons  combine  to  buy  a  property  and 
have  it  conveyed  to  them  jointly,  each  one  owning 
thereafter  an  undivided  interest  in  the  same;  and 
we  also  have  a  modified  form  of  family  ownership 
where  a  property  is  conveyed  to  a  husband  and  wife 
jointly  for  life  with  the  remainder  in  their  children 


SOCIALISM  OR  INDIVIDUALISM  25 

after  death;  and  we  have  ownership  in  common  by 
large  groups  of  individuals  where  they  form  a  cor- 
poration with  thousands  of  shares  and  the  corpora- 
tion owns  and  operates  large  properties. 

In  all  the  above  instances,  the  individual's  right 
is  recognized  and  he  can  separate  his  interest  from 
the  group  by  selling  it. 

We  also  have  under  the  present  system  true  com- 
mon ownership  by  groups  of  individuals  banded 
together  for  a  mutual  purpose,  such  as  religious  and 
monastic  orders  and  various  co-operative  or  be- 
nevolent societies  in  which  the  ownership  is  in  the 
society  and  the  right  of  the  individual  is  not  recog- 
nized only  in  so  far  as  he  is  a  member  of  that  so- 
ciety. The  difference  of  nation-wide  communal  own- 
ership from  all  the  above  is  considerable,  because 
under  it  the  individual's  right  is  so  completely  lost 
sight  of  as  to  be  practically  obliterated.  Under  it 
the  individual  has  no  feeling  of  ownership  what- 
ever. 

Therefore  when  Plato,  the  original  Utopian,  and 
all  those  who  have  followed  him,  decided  that  pri- 
vate property  and  the  selfishness  which  usually  ac- 
companies it,  was  responsible  for  many  of  the  evils 
of  society,  they  did  not  have  much  to  choose  from. 
The  only  alternative  to  private  property,  as  they 
thought,  was  common  property,  and  all  Utopians 
from  Plato  down  to  Marx,  Bakunin  and  Kropotkin 
have  had  to  make  the  same  choice. 


26  SHADOW    OR    SUBSTANCE 

But  in  modern  times  we  have  discovered  that 
there  can  be  two  variations  of  these  two  systems 
of  property  ownership  in  regard  to  its  occupation, 
use  and  operation. 

The  first  is  that  we  can  have  the  title  of  prop- 
erty held  by  individuals  and  at  the  same  time  have 
the  same  occupied,  used  and  operated  by  the  com- 
munity. 

It  is  evident  that  this  variation  can  in  the  very 
nature  of  things  only  be  a  temporary  expedient 
when  a  transition  from  private  to  public  ownership 
is  being  made. 

The  second  variation  is  to  have  the  title  of  the 
property  vested  in  the  community  as  a  whole  and 
have  the  same  used,  operated  and  occupied  by  in- 
dividuals under  temporary  leases,  grants  or  licenses. 

This  last  variation  has  been  especially  advocated 
by  Henry  George,  limited,  however,  to  property  in 
land  only.  He  urged  that  the  rights  of  individuals 
td  the  occupation  and  use  of  land  remain  undis- 
turbed just  as  it  is  at  present,  but  that  the  actual 
ownership  should  be  practically  resumed  by  and 
be  vested  in  the  state,  representing  all  the  people, 
using  the  power  of  taxation  as  a  weapon  to  accom- 
plish this  purpose.  I  have  discussed  this  at  length 
in  another  work. 

Marx,  therefore,  when  he  decided  with  Plato  and 
all  the  other  Utopians  that  private  property  must 


SOCIALISM  OR  INDIVIDUALISM  27 

be  abolished,  naturally  had  to  choose  the  same 
alternative  which  they  all  did,  namely,  common 
property. 

He  did  not  attempt  to  analyze  it.  His  mind  was 
so  filled  with  hatred  of  the  existing  order  th'xt  he 
took  it  for  granted  that  the  opposite  system  must 
be  the  true  one  and  he  devoted  only  a  few  para- 
graphs to  announcing  that  it  must  come. 

If  he  had  devoted  the  same  energy  to  analyzing 
communism  that  he  did  to  discovering  bad  exam- 
ples of  capitalism,  he  would  have  been  less  en- 
thusiastic about  his  Utopia. 

Property  and  Communism. 

When  a  man  exerts  himself  to  produce  something, 
the  motive  that  impels  him  is  the  desire  to  use  or 
possess  the  thing  produced.  This  product  is  what 
we  might  call  the  natural  reward  for  his  labor.  He 
feels  and  the  common  opinion  of  mankind  has  rec* 
ognized  that  this  should/  be  his  as  against  all  the 
world.  This  is  the  basis  of  private  property  and 
this  desire  to  produce  and  possess  things  is  one  of 
the  elements  of  our  human  nature  and  has  been  the 
mainspring  of  civilization. 

In  property  every  man  finds  the  proportionate 
recompense  which  justifies  his  labor.  We  speak  of 
liberty  and  property  together  because  a  man  could 
not  be  free  if  he  is  not  allowed  to  own  that  which 


28  SHADOW    OR    SUBSTANCE 

M  produces  and  to  freely  sell  or  exchange  it  for 
other  things  which  he  wishes. 

To  be  free  means  that  a  man  owns  himself,  that 
his  powers  of  mind  and  body  are  his  very  own,  as 
against  all  the  world  and  that  from  this  ownership 
of  himself  by  himself,  springs  his  right  to  own  the 
things  which  he  has  made  a  part  of  himself  by  his 
labor. 

A  slave  under  the  law  of  slavery  does  not  own 
himself,  he  is  declared  by  that  law  to  be  the  prop- 
erty of  another  man,  his  master,  and  therefore  he 
did  not  own  the  things  which  his  labor  produced. 
In  economic  terms'  a  slave  was  defined  to  be  a  per- 
son who  was  forced  to  labor  for  another  and  to 
give  up  to  him  all  the  products  of  his  labor. 

The  ownership  of  property  therefore  is  the  very 
foundation  of  our  whole  economic  structure  and 
in  its  broad  simple  terms  is  easily  understood. 

But  when  we  come  to  trace  it  through  all  the  com- 
plexities of  our  modern  industrial  system,  the  con- 
nection between  a  man's  work  and  the  things  he 
produces  is  not  so  clear  and  definite. 

In  the  factory  a  man  works  for  another  man,  the1 
owner  of  the  enterprise,  who  pays  him  wages  for 
his  labor  and  keeps  the  actual  product  for  him- 
self, out  of  which  he  of  course  hopes  to  and  usually 
does  make  a  profit. 


SOCIALISM  OR  INDIVIDUALISM  29 

The  Theory  of  Surplus  Value. 

It  is  this  profit  that  Marx  objected  to.  He 
claimed  that  it  represented  the  power  of  exploita- 
tion which  the  employer  had  by  reason  of  his  mo- 
nopoly of  capital  and  land  which  enabled  him  to 
take  the  lion's  share  of  the  production  and  that 
the  laborer  was  forced  by  his  poverty  to  sell  his 
labor  for  a  pittance  barely  sufficient  to  keep  him 
alive.  In  short,  that  the  laborer  was  practically 
what  he  called  a  wage-slave  (differing  but  little 
from  a  chattel-slave);  inasmuch  as  he  was  forced 
to  work  by  the  pressure  of  his  economic  condition, 
and  that  nearly  all  the  product  of  his  labor  did  not 
belong  to  him  but  became  the  property  of  the  cap- 
italist employer,  who  thus  became  rich  by  appro- 
priating the  fruits  of  the  labor  of  all  those  who 
worked  for  him. 

This,  according  to  Marx,  represented  the  eco- 
nomic ascendency  of  capital,  the  power  it  has  to 
squeeze  unearned  income  from  the  toil  and  sweat 
of  the  workers  while  at  the  same  time  it  sinks  them 
into  hopeless  poverty.  This  is  briefly  stated,  his 
theory  of  "Mehrwert"  or  surplus  value,  which  he 
adopted  from  William  Thompson. 

This  contention,  at  the  time  Marx  made  it,  was 
partially  true,  but  he  was  mistaken  in  ascribing  it 
to  the  possession  of  both  capital  and  land  by  the 
employers.  Capital  in  itself  has  no  tendency  what- 
ever to  depress  the  wages  of  workmen,  because  it 


30  SHADOW    OR    SUBSTANCE 

multiplies  the  enterprises  which  must  have  work- 
men and  often  employs  thousands  on  a  single  acre 
of  space  and  thus  directly  relieves  the  pressure  of 
population  on  land. 

But  the  monopoly  of  natural  resources  does  tend 
to  depress  the  wages  of  the  laboring  classes,  be- 
cause the  moment  all  natural  resources  pass  into 
private  ownership,  it  shuts  them  out  from  the  pos- 
sibility of  working  for  themselves.  They  then  no 
longer  have  any  choice  left.  They  must  work  for 
someone  who  will  employ  them  or  starve.  Under 
these  conditions  they  no  longer  can  make  the  free, 
uncoerced  bargain  about  their  employment  which 
they  would  be  able  to  make  if  they  had  the  alter- 
native of  making  a  living  for  themselves  on  some 
natural  resource.  This  condition  does  undoubtedly 
exert  indhect  economic  pressure  on  the  masses  of 
the  people. 

But  Marx  failed  to  figure  out  that  the  workers 
would  more  than  offset  this  disadvantage  by  setting 
up  a  monopoly  of  their  own  by  theif  unions.  A 
labor  union  is  a  monopoly  pure  and  simple,  because 
it  restricts  the  supply  of  that  particular  kind  of 
labor,  and,  by  forcing  collective  bargaining,  pre- 
vents any  individual  from  accepting  less  than  the 
scale  of  wages  fixed  by  the  union,  also  by  the  union- 
label,  by  solidarity  with  other  unions,  boycotts  and 
other  violence  against  non-union  workers  it  is  able 
to  maintain  an  effective  control  of  its  particular  field 


SOCIALISM  OR  INDIVIDUALISM  3A 

of   labor   and   force   the   employers   to   pay  wages 
higher  than  would  obtain  under  competition. 

The  true  test  of  a  monopoly  is  the  fact  that  it 
compel*  those  who  deal  with  it  to  pay  it  tribute  in  a 
price  which  is  greater  than  that  which  they  would 
pay  if  the  monopoly  did  not  exist. 

Monopoly,  as  the  French  philosopher  Proudhon 
so  wisely  remarked,  is  what  everybody  strenuously 
objects  to  when  somebody  else  has  it,  but  which 
each  one  strives  as  hard  to  secure  for  himself. 

The  laboiing  classes,  therefore,  met  the  disad- 
vantages which  they  suffered  from  the  monopoly 
of  the  land  by  setting  up  a  more  direct  and  effective 
monopoly  of  their  own.  They  were  aided  in  this 
by  the  further  development  of  capital,  which  mul- 
tiplied the  industries  requiring  labor  and  made  the 
labor  unions  more  powerful  and  by  making  a  more 
intensive  use  of  land  lessened  the  power  of  land 
monopoly. 

Nevertheless,  Marx  formulated  a  plausible  and 
alluring  theory  that  seeks  to  find  the  blame  for  our 
great;  inequalities  of  wealth,  and  other  social  ills, 
in  our  economic  structure  itself.  It  plays  on  that 
trait  of  human  nature  that  makes  us  inclined  to 
blame  everybody  and  everything  else  rather  than 
ourselves  for  our  condition.  It  must  be  indeed  very 
soothing  to  multitudes  of  people  to  believe  that  they 
are  poor  not  because  they  are  ignorant,  lazy,  shift- 


32  SHADOW    OR    SUBSTANCE 

less,  inefficient  or  stupid,  but  because  of  the  work- 
ing of  some  mysterious  economic  forces  beyond 
their  control.  And  it  is  also  no  doubt  very  attract- 
ive to  believe  that  all  we  have  to  do,  is  to  change 
that  complicated  structure  instead  of  ourselves,  and 
we  will  all  immediately  enjoy  the  blessings  of  pros- 
perity forever  more. 

Nothing  to  Lose  but  Their  Chains 

This  is  the  powerful  appeal  that  Marx  held  out 
to  his  followers.  With  dramatic  force  he  said, 
"Workers  of  the  world,  unite;  you  have  nothing  to 
lose  but  your  chains,  and  a  world  to  gain." 

This  thrilling  slogan  sounded  plausible  enough  in 
some  countries  like  Russia,  where  an  unintelligent 
despotism  seemed  to  hold  the  laboring  masses,  fig- 
uratively speaking,  in  economic  serfdom,  but  it  was 
utterly  false  even  there.  The  millions  of  Russian 
workmen  have  found  out  that  they  had  much  more 
to  lose  than  the  fetters  of  the  Czar.  Millions  of 
them  lost  their  lives,  millions  lost  even  the  small 
measure  of  comfort,  security  and  steadiness  of  em- 
ployment which  they  had  under  the  Czar.  Millions 
found  out  that  in  the  chaos  of  revolution  even  the 
bread  of  their  wives  and  children  disappeared  and 
left  them  to  perish  from  chronic  hunger  and  dis- 
ease. Millions  lost  even  the  little  liberty  they  had 
under  the  Czar  of  choosing  their  own  time,  place 
and  kind  of  work  and  place  of  residence  and  found 


SOCIALISM  OR  INDIVIDUALISM  33 

the  new  and  heavier  chains  of  drafted  compulsory 
labor  and  the  tyranny  of  petty  dictators  forged 
upon  them. 

Decidedly  the  workmen  even  of  Russia  had  much 
to  lose  besides  their  supposed  chains.  The  workers 
of  more  highly  developed  industrial  nations  would 
have  much  more  to  lose.  They  are  the  chief  ben- 
eficiaries of  the  industrial  plant  of  a  nation  and  the 
more  highly  developed)  this  is,  the  better  is  their 
general  condition.  But,  on  the  other  hand,  they 
also  have  more  to  lose  from  a  breakdown  of  this 
industry. 

Some  figures  on  the  ownership  of  wealth  in  the 
United  States  recently  compiled  are  instructive  on 
this  point.  It  shows  that  the  farmers  of  this  coun- 
try, numbering  6,561,502,  own  $41,000,000,- 
000.00  That  5,250,000  persons  own  homes  and 
other  real  estate  in  villages,  towns  and  cities  esti- 
mated at  $20,000,000,000.00. 

Fifty  million  people  individually  and  through  in- 
surance companies,  trust  companies,  savings  banks, 
fraternal  societies  and  other  forms  of  ownership 
own  the  railroads,  electric  lines  and  other  public 
utility  companies.  According  to  the  latest  report 
of  the  Comptroller  of  Currency  of  the  United  States, 
there  were: 

Savings  Accounts 

In  national  banks 8,109,242 

In  mutual  savings  banks 9,445,327 


34  SHADOW    OR    SUBSTANCE 

In  stock  savings  banks 1,118,583 

In  postal  savings  department 466,109 

In   trust   companies 4,035,422 

In  state    (commercial)    banks 8,184,163 

A  total  of  31,358,846  savings  accounts  in  the 
United  States  or  an  average  of  more  than  one  to 
each  family,  with  a  total  deposit  of  $5,500,000,- 
000.00  and  there  are  also  4,500,000  of  sharehold- 
ers in  building  and  loan  associations,  whose  ac- 
counts are  growing  by  regular  deposits  every  month, 
and  which  at  maturity  will  amount  to  over  $10,- 
000,000,000.00. 

There  are  other  thousands  who  are  buying  gilt- 
edge  securities  on  the  installment  plan;  or  paying 
off  mortgages  by  monthly  payments. 

It  took  just  1 00  years  to  brin^  the  total  num- 
ber of  individual  savings  accounts  up  to  twenty- 
two  millions  (1916).  But  in  five  more  years  nine 
million  more  accounts  were  added.  The  1921  sav- 
ings census  quoted  above  was  taken  during  the  low 
point  of  the  depression. 

There  are  2,000,000  who  own  stock  and  bonds 
in  industrial  enterprises  such  as  United  States  Steel 
Corporation,  tire  and  auto  companies,  etc.  Sev- 
eral million  people  own  United  States  Government 
bonds  issued  during  the  war  and  other  state,  county 
and  municipal  bonds.* 

*I  have  chosen  the  above  facts  from  the  U.  S.  Census  because 
it  is  well  known  to  be  reliable  and  impartial.  Those  who  wish 


SOCIALISM  OR  INDIVIDUALISM  35 

And  this  is  not  all;  millions  of  dollars  are  in- 
vested in  highways,  which  belong  to  all  the  people, 
and  millions  in  our  school  system,  in  public  parks 
and  buildings,  swimming  pools,  baths,  libraries,  hos- 
pitals and  many  other  forms  of  public  property 
which  are  owned  by  all  the  people  and  is  for  the 
use  and  benefit  of  all  alike.  It  is  perfectly  evident 
from  these  facts  that  this  country  belongs  to  the 
many  and  not  to  the  few.  It  is  however  true  that 
a  disproportionate  share  of  our  national  wealth  is 
owned  by  a  comparatively  small  percentage  of  our 
people.  In  this  connection  some  wild  statements 
have  been  repeated  so  often  that  they  have  come 
to  be  accepted  as  the  truth,  namely,  that  one  per 
cent  of  our  people  own  ninety  per  cent  of  the  na- 
tional wealth. 

This  is  so  manifestly  absurd  that  it  needs  no  refu- 
tation. The  actual  facts  are  sufficiently  serious, 
however,  without  exaggeration.  They  show  that 
about  10  per  cent  of  our  people  own  between  60 
and  65  per  cent  of  the  nation's  wealth.  This  is  a 
problem  that  will  require  our  most  careful  consid- 
eration. 

It  is  not  so  much  the  wealth  accumulated  by  the 
genius  and  hard  work  of  the  original  founders  of 
the  fortunes  which  is  detrimental. 

to  pursue  this  line  of  thought  further  should  reati  "Income  in 
the  United  States,"  published  by  the  National  Bureau  of  Eco- 
nomic Research,  and  they  will  find  much  more  evidence  of  the 
same  nature,  and  better  digested  and  brought  down  to  and  in- 

i  eluding  1919,  whicfa  is  {en  years  later  than  the  census  fro.ni 
which  iTiave  quoted.  A  careful  reading  6F  that  treatise  will 

"  convince  anyone  that  I  have  been  very  moderate  and  modest  in 
choosing  my  facts. 


36  SHADOW    OR    SUBSTANCE 

The  harm  comes  from  the  tendency  to  create 
huge  trust  estates  self  perpetuating  under  able  man- 
agement which  continue  to  shield  the  beneficiaries 
from  every  vicissitude  of  fortune  and  even  from  the 
consequences  of  their  own  folly  or  incapacity.  This 
too  frequently  has  had  the  result  of  creating  a  class 
of  luxurious  idlers  of  little  benefit  to  themselves  or 
to  the  nation. 

It  is  probable  that  we  will  have  to  revise  to  some 
extent  our  laws  regulating  the  transmission  of  prop- 
erty from  one  generation  to  another,  and  also  our 
inheritance  taxation  so  as  to  bring  about  a  better 
distribution  of  wealth  and  at  the  same  time  bring 
this  class  back  within  a  reasonable  time  to  the 
necessity  and  stimulation  of  useful  work. 

This  will  be  in  reality  a  blessing  to  them  instead 
of  a  hardship.  The  original  American  idea  that 
there  should  be  only  a  few  generations  from  shirt 
sleeves  to  shirt  sleeves  is  not  a  bad  one.  We  can 
accomplish  this  with  our  present  laws  without  any 
disturbance  whatever  to  our  productive  industry. 

I  refer  only  briefly  to  this  phase  of  the  subject  be- 
cause it  would  take  too  much  space  to  treat  it  fully. 
It  has  been  ably  discussed  by  several  writers,  no- 
tably by  Harlan  E.  Read.  Without  subscribing  to 
some  of  these  extreme  views,  the  facts  which  they 
present  are  worthy  of  careful  study  and  considera- 
tion* 

*The  Abolition  of  Inheritance,  by  Harlan  E.  Read.  McMillan 
&  Co.,  New  York. 


SOCIALISM  OR  INDIVIDUALISM  37 

After  all,  up  to  the  present  time,  most  of  the 
wealth  which  has  fallen  into  the  hands  of  the  com- 
paratively small  number  seems  to  be  the  superlative 
result  of  the  tremendous  energy  and  youthful  exub- 
erance of  our  nation  developing  our  very  great  nat- 
ural resources.  We  cannot  afford  to  put  a  damper 
on  this  or  repress  it  in  any  way.  Our  only  con- 
cern need  be  that  conditions  of  great  inequality 
shall  not  be  perpetuated  for  generations  by  careless, 
short-sighted  or  unwise  laws. 

But  the  share  of  wealth  owned  by  the  90  per  cent 
of  our  people,  though  apparently  small  when  ex- 
pressed in  percentages,  is  nevertheless  a  very  sub- 
stantial sum  of  about  80  billions.  This  is  as  great 
as  the  total  national  wealth  of  most  of  the  other 
great  nations  of  the  earth  and  about  as  great  as  our 
total  national  wealth  was  20  years  ago. 

It  is  extremely  absurd,  therefore,  to  tell  the  over- 
whelming majority  of  the  people  of  this  country 
that  they  have  nothing  to  lose  from  the  overthrow 
of  the  existing  industrial  system. 

Marx's  idea  was  that  the  few  whom  he  called 
the  exploiters  were  the  only  ones  who  could  lose 
anything. 

I  will  take  up  this  matter  of  exploitation  a  little 
later.  Just  now  I  wish  to  follow  Marx's  plan  to 
secure  to  the  workers  the  full  product  of  their  labor. 


38  SHADOW    OR    SUBSTANCE 

Labor  Under  Communism. 

Under  communism  every  worker  will  work  for 
the  state  and  the  state  (not  he)  will  own  the  prod- 
uct and  will  distribute  it  according  to  the  needs  of 
the  people.  This  will  be  done  as  the  chief  officials 
judge  it  to  be  for  the  best.  The  great  idea,  of 
course,  will  be  that  nobody  shall  be  allowed  to  make 
a  profit  and  that,  in  this  way,  all  that  the  people 
produce  will  go  back  to  them  without  any  rake-off 
subtracted  by  parasitic  capitalists.  Therefore  all 
the  commodities,  food,  clothing,  etc.,  will  be  placed 
in  the  storehouses  of  the  state  and  distributed  to  the 
people  by  cards  or  otherwise  according  to  their 
merits,  or  more  often  according  to  their  needs. 

But  who  is  going  to  decide  all  this?  Who  shall 
determine  what  kind  of  work  the  people  shall  do. 
what  kind  of  commodities  the  state  is  most  In  need 
of,  what  kind  of  production  shall  cease  in  order 
that  other  more  necessary  articles  be  produced? 
All  these  extremely  complicated  problems  in  a  na- 
tion of  100,000,000  people  require  a  tremendous 
grasp  of  details  far  beyond  the  capacity  of  any  one 
man  or  group  of  men.  It  would  require  a  very 
large  organization  with  ramifications  everywhere  to 
keep  in  touch  with  the  needs  of  the  nation. 

Marx  says  that  of  course  we  will  elect  these  rep- 
resentatives of  the  people,  who  will  have  charge  of 
all  this.  Very  well,  let  us  concede  for  the  moment 
that  we  will  elect  good  men,  which  we  have  not 


SOCIALISM  OR  INDIVIDUALISM  39 

always  done,  and  that  they  will  do  their  best,  which 
they  seldom  do. 

Now,  factory  production  cannot  go  on  efficiently 
and  smoothly  if  every  man  is  left  free  to  select  his 
own  task  and  do  it  as  he  likes.  There  must  be 
overseers  in  command  who  shall  see  that  every 
man  does  what  he  is  told  and  does  it  in  co-ordina- 
tion with  the  other  workers. 

In  an  army  we  have  an  officer  for  every  dozen 
or  so  privates,  but  an  army  is  a  simple  organization 
compared  to  a  great  industry.  A  foreman,  in  the 
latter,  must  not  only  have  the  power  to  make  his 
men  do  the  allotted  task,  he  must  also  determine 
the  fitness  of  his  men  for  the  job  given  them.  These 
foremen,  of  course,  cannot  be  elected  by  the  men 
immediately  under  them,  because  in  that  case  they 
would  have  no  authority  whatever.  They  must  be 
appointed  by  the  chiefs  higher  up. 

To  control  millions  of  workers  we  will  have  to 
have  more  than  a  million  of  petty  foremen,  under 
the  command  of  greater  chiefs  higher  up,  and  over 
all  will  be  the  great  national  leaders.  We  begin  to 
see  the  outlines  of  a  powerful  organization. 

Now  the  men  working  under  these  petty  fore- 
men must  obey  orders  or  the  whole  scheme  fails. 
If  they  refuse,  or  do  it  badly,  they  cannot  be  dis- 
charged, because  there  is  no  place  to  discharge  them 
to,  under  communism;  they  must  therefore  be  com- 


10  SHADOW    OR    SUBSTANCE 

pelled  to  do  it  by  punishment  in  some  way.  The 
condition  of  the  ordinary  individual  under  com- 
munism therefore  will  be  that  he  will  belong  to  a 
group  under  a  foreman  who  will  determine  what  he 
is  fitted  for,  what  he  shall  do  and  how  he  shall  do 
it,  and  with  power  to  make  him  do  it  by  punish- 
ment and  fix  his  compensation  according  to  his  es- 
timate. Moreover,  he  will  have  no  way  to  get  any- 
thing except  from  the  state  and  if  his  food  card 
is  withdrawn  from  himself  and  his  family  he  and 
they  will  surely  starve.  He  would  also  have  to 
live  where  another  boss  shall  appoint. 

Socialist  writers  have  cheerfully  informed  us  that 
under  socialism  there  will  be  no  sore-eyed  book- 
keepers nor  husky,  able-bodied  shoemakers.  If  I, 
for  instance,  desired  to  devote  myself  to  medical 
science  and  the  petty  boss  over  me  decided  that  I 
was  only  fit  to  dig  ditches,  I  would  have  to  dig 
ditches  or  starve.  Would  I  in  that  case  do  it  wil- 
lingly or  well?  If  then  he  decided  that  I  was  not 
worth  much  as  a  ditch-digger  and  that  I  must  re- 
ceive no  more  than  I  deserved,  what  would  I  have 

NOTE — This  is  not  mere  imagination.  It  actually  oc- 
curred. Dr  J.  "William  Lambie  a  native  of  Hammond, 
N.  Y.,  graduated  in  dentistry  at  the  University  of 
Pa.,  settled  in  Russia  33  years  ago.  He  became  wealthy 
as  the  dentist  of  the  late  Grand  Duke  Michael.  After 
the  Revolution,  the  Bolsheviki  confiscated  all  his  for- 
tune and  put  him  into  jail  for  months.  Then  on  releasing 
him,  because  guiltless,  they  decided  that  his  services  as 
dentist  were  not  needed  and  they  put  him  to  work 
scrubbing  floors,  a  poor  scrubman,  he  gets  barely  suf- 
ficient to  maintain  life.  His  sister,  Mrs.  S.  C.  Mc- 
Lennan of  Syracuse,  N.  Y.  through  our  department  of 
State  is  trying  to  secure  his  release  and  return  here. 


SOCIALISM  OR  INDIVIDUALISM  41 

in  life  that  the  slave  did  not  have? 

Under  these  conditions  will  the  common  man  be 
free  or  will  he  come  under  the  definition  of  a  slave? 

And  if  this  petty  boss  conceives  a  grudge  against 
him  (as  we  know  they  sometimes  do),  will  he  not 
have  the  power  to  satisfy  his  spite  and  will  he  fail 
to  do  it? 

Will  the  common  worker  be  on  an  equality  with 
his  petty  boss  or  all  the  other  bosses? 

Communism  therefore  is  compelled  to  resort  to 
compulsory  labor,  to  an  industry  determined  and 
dictated  by  political  bosses,  to  an  arbitrary  and 
capricious  distribution  of  goods,  to  a  predetermined 
and  arbitrary  mode  and  place  of  living  and  to  the 
tyranny  of  millions  of  petty  bosses  either  appointed 
or  elected  by  ballot. 

Marx's  piomises  therefore  were  to  make  the 
working  people  equal,  independent  and  free  by 
abolishing  private  property;  but  the  actual  result 
of  his  scheme  has  been  to  substitute  for  it  a  system 
that  establishes  universal  slavery  and  the  most  in- 
tolerable inequality  and  injustice. 

But  this  is  not  all.  The  most  immediate  and  dis- 
astrous result  of  communism  is  to  strangle  produc- 
tion. 

Communism  Strangles  Production. 

When  we  destroy  a  man's  ambition  by  making 
it  impossible  for  him  to  own  anything  of  his  own  or 


42  SHADOW    OR    SUBSTANCE 

to  get  ahead  in  any  way,  no  matter  how  hard  he 
strives,  we  at  once  take  away  from  him  the  incen- 
tive to  work.  He  becomes  an  unwilling  worker, 
with  all  which  that  implies.  Homer,  the  ancient 
Greek,  said:  'The  day  that  makes  a  man  a  slave 
takes  half  his  worth  away."  Under  communism 
the  good  will  of  his  boss  is  more  important  to  a 
worker  than  anything  he  can  do  for  himself. 

This  was  the  economic  defect  of  slavery.  Slaves 
did  not  produce  with  intelligent,  willing  hands. 

Moreover,  great  industries  are  usually  built  up 
by  the  courage,  energy,  perseverance  and  thrift  of 
some  one  man.  Such  men  are  the  product  of  an 
environment  of  liberty,  of  individual  initiative  and 
struggle  against  circumstances  and  competitors. 
They  are  spurred  on  by  ambition  to  secure  a  great 
reward,  and  under  our  existing  system  they  some- 
times get  it  (if  they  succeed),  but  we  say  nothing  ot 
those  who  fail.  Communism  could  never  develop 
such  exceptional  men  because  it  offers  them  nothing 
to  stimulate  their  ambition  and  the  whole  atmos- 
phere of  government  control  and  regulation  is  fatal 
to  individual  enterprise  and  energy.  If  in  spite  of 
all  handicapa  under  communism  such  a  man  should 
appear,  he  would  still  have  over  him  some  political 
boss  who  has  been  elected  more  by  popularity  than 
by  merit  and  whose  product  is  eloquence  rather 
than  goods. 

But  without  these  captains,   industry  languishes 


SOCIALISM  OR  INDIVIDUALISM  43 

and  production  dwindles.  Moreover,  they  are  the 
very  ones  who,  according  to  Marx,  were  exploiting 
the  working  class  and  getting  rich  by  making  a  profit 
out  of  their  labor.  "Away  with  them,  he  says.  Com- 
munism must  destroy  these  enemies  of  trie  people 
in  order  that  the  workingman  shall  at  last  get  all 
the  product  of  his  own  labor." 

That  is  what  actually  happened  in  Russia.  They 
murdered  thousands  of  these  factory  owners,  man- 
agers and  experts  and  drove  other  thousands  into 
exile,  under  the  delusion  that  only  those  who 
work  with  their  hands  were  producers,  and 
they  put  the  workingmen  in  charge  of  the  works. 
And  then  they  discovered  that  the  ignorant  agi- 
tator could  not  run  the  factory,  that  production  did 
not  thrive,  that  the  surplus  disappeared  as  if  by 
magic  and  quickly  reduced  the  individual  worker 
to  a  starvation  basis.  And  when  H.  G.  Wells,  the 
English  writer,  formerly  a  socialist,  and  who  still 
calls  himself  a  collectivist,  went  there  two  years 
later  in  order  to  admire;  their  system,  the  leaders 
admitted  to  him  (that  which  indeed  they  could  not 
hide),  that  all  the  people  in  the  nation  were  in  des- 
perate need  of  everything,  food,  clothing,  shelter, 
transportation  and  all  the  necessities  of  life. 

Many  perfectly  disinterested  travelers  have  noted 
that  there  has  been  an  almost  complete  disappear- 
ance of  all  household  goods,  even  bedsteads,  mat- 
tresses, bed  clothing,  etc.,  as  if  a  marauding  army 


44  SHADOW    OR    SUBSTANCE 

had  sacked  the  whole  country. 

But  badly  as  they  needed  all  these  things,  they 
needed  these  very  industrial  managers  and  experts 
to  take  charge  again  of  production  and  transporta- 
tion and  re-establish  efficient  methods  and  the 
problem  was,  how  to  bring  them  back  under  com- 
tnunism.  And  then  a  year  later  an  accidental 
drought  brought  on  the  catastrophe.  This  should 
have  been  expected  and  foreseen,  because  Russia 
has  always  had  periodic  droughts,  but,  under  the 
government  of  the  Czar,  the  peasants  produced 
large  surpluses  of  food  for  export,  and  transporta- 
tion was  sufficiently  effective  to  carry  the  surplus 
of  other  sections  into  the  stricken  territory  and  tide 
it  over  till  the  next  harvest. 

But  under  bolshevism,  the  peasants  got  tired  of 
being  plundered  out  of  their  crops  and  had  ceased 
to  cultivate  except  for  their  own  immediate  needs, 
and  thus  even  before  the  drought  the  whole  na- 
tion was  on  a  hunger  basis  and  the  drought  con- 
verted it  into  actual  famine  and  literally  drove  mil- 
lions of  people  headlong  from  their  homes  in  a  des- 
perate search  for  food. 

The  scenes  of  horror  which  took  place  in  that 
terrible  famine  have  appalled  the  entire  world  and 
would  tax  the  descriptive  powers  of  Dante  himself. 

Note: — Many  of  the  American  relief  workers 
reported!  that  at  every  station  far  away  from  the 


SOCIALISM  OR  INDIVIDUALISM  45 

seat  of  the  famine,  they  were  besieged  by  thousands 
of  miserable  people  begging  for  a  crust  of  bread, 
and  that  in  the  famine  area  itself  the  people  had 
resorted  to  cannibalism. 

This  has  forced  even  the  fanatic  leaders  to  re- 
tract a  part  of  their  communism  and  confess  that 
they  did  not  know  *'it  was  loaded."  They  now 
hold  out  the  beggar's  hand  to  the  hated  capitalists 
and  ask  them  to  come  and  save  Russia  from  the 
terrible  abyss  into  which  they  have  plunged  her. 

Bolshevism  the  Main  Cause  of  the  Catastrophe* 

There  are  many  who  sincerely  believe  that  this 
catastrophe  in  Russia  is  not  the  inevitable  result  of 
the  socialist  revolution,  but  was  produced  by  other 
causes,  such  as  the  world  war,  the  civil  wars,  the  al- 
lied blockade,  etc.  These  no  doubt  contributed 
their  share  of  destruction,  but  they  were  small  fac- 
tors when  compared  to  bolshevism  itself. 

The  official  platform  and  statutes  adopted  by 
the  communist  Internationale  and  reported  in  the 
Isvestia,  the  official  organ  of  the  Soviet,  demon- 
strates this  beyond  a  shadow  of  doubt.  It  reads 
as  follows: 

"The  victory  of  socialism  over  capitalism,  as  the 
first  step  to  communism,  demands  the*  accomplish- 
ment of  the  following  tasks  by  the  working  people 
as  the  only  revolutionary  class. 


46  SHADOW    OR    SUBSTANCE 

'The  first  is  to  lay  low  the  exploiters  and  first  of 
all  the  bourgeoisie  as  their  chief  economic  and  po- 
litical representatives;  to  completely  defeat  them; 
to  crush  their  resistance. 

"Only  a  violent  defeat  of  the  bourgeosie,  the  con- 
fiscation of  their  property,  the  annihilation  of  the 
entire  bourgeois  government  from  top  to  bottom, 
parliamentary,  juridical,  military,  beaurocratic,  ad- 
ministrative, municipal,  etc.  Only  such  measures 
will  be  able  to  guarantee  the  complete  submission 
of  the  whole  class  of  the  exploiters. 

"The  preparation  of  the  dictatorship  of  the  prole- 
tariat  demands  the  replacing  of  the  old  leaders  by 

communists,  in  all  kinds  of  proletarian  organiza- 
tions. 

"It  is  necessary  to  remove  all  the  representatives 
of  the  labor  aristocracy,  or  such  bourgeois  work- 
men, from  their  posts  and  replace  them  by  even 
inexperienced  workmen,  in  sympathy  with  the  ex- 
ploited masses.  The  dictatorship  of  the  proleta- 
riat will  demand  the  appointment  of  such  inexperi- 
enced workmen  to  the  most  responsible  positions, 
otherwise  the  labor  government  will  be  powerless." 

Here  you  have  the  program  of  destruction  in  all 
its  simplicity. 

The  dictatorship  of  the  inexperienced,  the  ignor- 
ant and  the  incapable  and  the  complete  destruction 
of  all  the  bourgeois,  which  means  all  the  class  which 
has  intelligence  and  has  therefore  accumulated  any 


SOCIALISM  OR  INDIVIDUALISM  47 

property,  much  or  little. 

The  moment  such  a  program  is  decreed  in  a 
nation,  with  the  abolition  of  private  property,  then 
the  whole  nation  is  turned  from  production  into 
looting,  murder  and  destruction.  All  the  prison 
doors  were  of  course  opened,  because  all  the  crim- 
inal classes  were  simply  offenders  against  the  bour- 
geois government  and  morals,  and  were  regarded 
favorably  by  the  Bolsheviki.  These  criminal  classes 
were  turned  loose  with  the  sanction  of  the  new  law 
to  plunder  those  who  had  anything.  They  were 
of  course  reinforced  by  all  those  who  were  only 
restrained  formerly  by  fear  of  punishment.  Pro- 
duction of  course  ceased  almost  at  once,  because 
who  would  care  to  work  at  some  hard  task  when 
it  is  more  interesting  and  profitable  to  plunder  the 
enemies  of  the  new  revolution,  and  these  of  course 
were  all  those  who  had  any  property.  For  instance 
coal  mines  ceased  to  be  operated  under  that  system 
because  digging  coal  is  very  irksome  labor  and  no- 
body will  do  it  except  under  necessity. 

In  a  cold  country  like  Russia,  fuel  soon  becomes 
scarce  when  production  ceases,  but  the  communists 
need  not  suffer  when  they  can  seize  the  personal 
property  of  the  bourgeoisie  and  burn  up  their  tables, 
chairs,  bedsteads,  etc. 

Moreover  all  semi-public  property  at  once  ceases 
to  belong  to  anybody  in  particular  and  can  be  seized 


48  SHADOW    OR    SUBSTANCE 

by  the  first  who  comes  along.  Thus  thousands  of 
freight  cars  on  sidings  everywhere  were  destroyed 
to  provide  fuel  for  the  people  and  even  wooden 
blocks  were  torn  up  from  the  streets  for  that  pur- 
pose. 

Transportation  was,  of  course,  immediately  de- 
moralized under  such  conditions,  and  all  the  social 
activities  which  depended  on  it  were  broken  down 
along  with  it. 

Communism  Destructive  to  Agriculture. 

But  the  most  direct  effect  of  the  Bolshevist 
scheme  was  on  agriculture  and  we  can  quote  Lenin 
himself  on  that  point  as  published  in  The  Isvestia, 
the  official  organ  of  the  Soviet  leaders. 

The  introductory  declaration  of  the  communist 
party  resolution  on  this  subject  is  illuminating.  It 
reads  as  follows: 

"No  one  but  the  city  industrial  proletariat,  led 
by  the  communist  party,  can  save  the  laboring 
masses  in  the  country  from  the  pressure  of  capital- 
ism and  landlordism.'* 

How  they  propose!  to  do  this  is  explained  further 
on  as  follows:  "The  revolutionary  proletariat  must 
proceed  to  an  immediate  and  unconditional  confis- 
cation of  the  estates  of  the  landowners/* 

After  the  proletarian  coup  d*etat  not  only  the 
confiscation  of  the  landed  estates  shall  become  ab- 
solutely necessary  but  also  the  banishment  or  intern- 


SOCIALISM  OR  INDIVIDUALISM  49 

ment  of  all  the  landowners." 

"The  proletarians  must  put  up  with  a  temporary 
decline  in  production  so  long  as  it  makes  for  the 
success  of  the  revolution." 

But  this  decline  of  production  did  not  prove  to 
be  temporary  at  all.  It  was  found  to  be  a  perma- 
nent feature  of  Bolshevism  and  it  got  worse  and 
worse  and  by  the  spring  of  192 1/ conditions  had 
become  so  acute  that  Lenin  addressing  his  followers 
before  the  all-Russian  communist  convention  said: 
"We  must  take  most  immediate,  most  urgent,  most 
extreme  measures  for  the  improvement  of  the  condi- 
tions of  the  peasantry  and  the  raising  of  itsi  produc- 
tive forces." 

"The  trouble  with  our  peculiar  military  commu- 
nism consisted  in  that  we  practically  took  from  the 
peasants  all  the  superfluous  foodstuffs  and  even 
sometimes  part  of  what  the  peasant  really  needed 
for  himself,  for  the  needs  of  the  army  and  the  work- 
ers in  the  cities." 

He  also  spoke  of  the  lack  of  farm  animals  which 
prevented  the  transport  of  firewood,  our  chief  fuel, 
by  the  peasant's  horses. 

Any  sane  man  of  ordinary  intelligence  could  eas- 
ily have  foreseen  that  the  banishment  or  imprison- 
ment of  all  farmers  who  knew  anything  about  farm- 


50  SHADOW    OR    SUBSTANCE 

ing,  the  confiscation  of  all  their  property  and  the 
commanded  ing  of  their  farm  animals  would  surely 
paralyze  the  greater  part  of  agricultural  production. 

Also  that  you  could  not  expect  the  peasants  to 
continue  to  produce,  when  they  were  robbed  of 
even  what  was  necessary  for  their  own  needs  and 
of  the  grain  necessary  for  seed. 

No  surer  scheme  could  possibly  have  been  de- 
vised that  would  so  quickly  reduce  the  whole  nation 
to  a  hunger  basis. 

But  the  interesting  thing  is  that  the  Bolsheviki 
themselves  foresaw  it,  but  thought  it  would  be  only 
temporary;  and  that  Lenin  himself  now  admits  it. 

The  communist  leaders  found  it  comparatively 
easy  to  prod  the;  city  workmen  in  the  back  with 
soldiers'  bayonets  but  the  peasants  in  the  country 
were  far  too  numerous  and  scattered  to  be  reached 
by  that  gentle  manner  of  persuasion.  It  would  have 
taken  millions  more  of  soldiers  in  the  red  army  to 
reach  the  1 40  millions  of  peasants  and  this  sheer 
physical  fact  compelled  the  communists  to  conceed 
that  the  peasants  must  be  allowed  to  work  indi- 
vidually in  their  own  way. 

Annual  Production  the  Main  Wealth  of  a  Nation. 

John  Stuart  Mill  demonstrated  that  the  main 
wealth  of  a  nation  consists  almost  entirely  of  its  an- 
nual production.  The  little  accumulated  personal 
property  and  permanent  improvements  of  the  past 


SOCIALISM  OR  INDIVIDUALISM  51 

are  wholly  insignificant  when  compared  to  the  an- 
nual production. 

When  a  people  therefore  is  turned  from  this  an- 
nual production  to  loot  and  consume  the  little  ac- 
cumulation of  the  past,  it  is  soon  dissipated  and  the 
whole  nation  is  quickly  reduced  to  abject  misery 
from  cold,  hunger  and  disease.  In  their  abysmal 
ignorance  these  bolsheviki  imagined  that  because 
some  so-called  bourgeois  and  a  few  aristocrats 
lived  in  comfort  on  their  incomes  that  all  they  had 
to  do  was  to  take  it  away  from  them  and  then  all 
the  people  could  enjoy  the  same  ease.  They  failed 
to  realize  first  that  this  class  constituted  only  an 
infinitesimal  small  number  compared  to  the  immense 
mass  of  the  people  and  that  if  all  the  incomes  of  all 
the  aristocrats  and  bourgeosie  combined  should  be 
distributed  among  the  people  it  would  only  contrib- 
ute a  small  addition  to  the  income  of  each  one  of  the 
many  millions  of  workers.  And  second  that  the 
wealth  of  the  privileged  classes  consists  mainly  of 
paper  titles  which  enables  them  to  receive  a  share 
of  the  annual  production  and  that  when  this  annual 
production  ceases  all  this  wealth  disappears  as  if 
by  magic. 

In  other  words,  the  main  trouble  in  Russia  was 
not  so  much  the  wealth  enjoyed  by  a  small  class  as 
the  fact  that  the  whole  nation  suffered  from  poverty 
due  to  scanty  production.  If  the  great  masses  of 
the  people  had  received  every  bit  of  the  annual 


52  SHADOW    OR    SUBSTANCE 

production  of  the  nation  they  would  still  have  been 
miserably  poor  and  the  total  elimination  of  the  in- 
comes of  the  wealthy  class  would  have  been  scarcely 
noticed  in  the  total  result.  The  main  struggle, 
therefore,  of  the  Russian  people,  considering  them 
as  a  unit,  was  against  the  forces  of  nature  and  their 
hard  environment.  In  this  struggle  they  were  great- 
ly aided  by  the  guidance  and  intelligence  of  the 
small  wealthy  class  which  unquestionably  contrib- 
uted fully  as  much  to  the  total  result  as  they  re- 
ceived from  it.  The  masses  destroyed  this  class  in 
order  to  seize  what  they  had,  but  in  doing  so,  they 
lost  by  the  diminished  efficiency  of  production  in- 
comparably more  than  they  gained. 

It  is  perfectly  evident  that  the  introduction  of 
such  a  system  in  the  United  States  even  now  would 
precipitate  a  greater  catastrophe  than  it  did  in  Rus- 
sia because  we  are  a  more  highly  developed  indus- 
trial nation  and  more  of  our  people  are  dependent 
for  existence  on  the  regular  processes  of  produc- 
tion and  distribution. 

The  population  of  the  whole  Russian  Empire  just 
before  the  war,  was  according  to  the  Czar's  census 
of  1910  and  the  estimates  of  increase  up  to  1914 
about  1  78,000,000.  It  was  estimated  that  the  pop- 
ulation of  Russia  had  shrunk  about  10,000,000  by 
reason  of  the  world  war  and  by  the  decrease  in 
births  and  increase  in  death  rate,  so  that  at  the  out- 
break of  the  Revolution  it  was  about  168,000,000. 

The  Russian  Soviet  authorities  took  a  census  of 


SOCIALISM   OR  INDIVIDUALISM  53 

Russia  and  of  the  federated  republics  and  terri- 
tories under  their  control  in  August,  1920.  The 
results  of  this  census  were  reported  in  the  third  Rus- 
sian census  publication  by  M.  W.  Mikhailovsky, 
director  of  the  central  statistical  bureau  of  the  cen- 
sus, and  also  by  Dr.  A.  N.  Syssin,  head  of  the  Peo- 
ple's Health  Commissariat  of  the  Soviet  Govern- 
ment. 

These  facts  were  translated  and  republished  in 
the  "Epidemilogical  Intelligence'*  published  by  the 
Health  section  of  the  League  of  Nations  and  also 
reviewed  in  the  Public  Health  Reports  of  our  Gov- 
ernment (Washington,  D.  C.).  Dr.  Syssin  compiled 
the  official  total  population  of  Russia  and  all  fed- 
erated republics  and  territories  under  the  Soviet 
regime  or  affiliated  with  it,  in  August,  1920,  about 
three  and  one-half  years  after  the  Revolution*  as 
131,546,000.  This  is  about  36,450,000  less  than 
the  estimate  in  1 9 1  7.  A  part  of  this  shrinkage 
was  due  to  the  loss  of  territory  suffered  by  Russia 
after  the  war  which  made  Finland,  Esthonia,  Lat- 
via, Lithuania  and  Poland  independent  states  and 
annexed  Bessarabia  to  Roumania  and  also  took 
away  part  of  Trans-Caucasian  territory.  The  loss 
of  population  from  this  source  was  in  round  figures 
about  18,450,00,  which,  deducted  from  the  36,- 
450,000,  leaves  about  18,000,000  actual  shrinkage 
of  population  in  the  territory  ruled  or  controlled  by 
the  Russian  Communist  Soviet. 

A  part  of  this  shrinkage  is  accounted  for  by  the 
emigration  of  millions  who  made  their  escape  into 


54  SHADOW    OR    SUBSTANCE 

foreign  countries. 

M.  Mikhailovsky  estimates  this  loss  at  between 
two  and  three  millions  of  people.  He  also  esti- 
mates that  about  one  million  lost  their  lives  in  the 
civil  wars  and  commotions  by  murder  and  other 
violence.  The  figures  of  the  census  which  give  the 
males  as  61,029,000  and  the  females  at  70,517,- 
000,  or  an  excess  of  about  9,500,000  females  over 
males,  are  highly  suggestive  of  wholesale  violence 
and  disorder,  which  naturally  kills  off  the  males 
faster  than  the  females.  This  leaves  a  shrinkage 
from  natural  causes,  such  as  disease,  starvation,  etc., 
of  about  15,000,000  in  the  population  of  Soviet 
Russia  in  the  H/z  years  of  Communist  rule  up  to 
August,  1920.  The  official  figures  given  by  both 
Dr.  Syssin  and  M.  Mikhailovsky  abundantly  ex- 
plain this  loss.  They  show  by  the  vital  statistics 
compiled  all  over  Russia  that  the  death  rate  in 
1920  had  reached  the  awful  figure  of  55.8  per 
1 000  of  the  population,  as  against  a  death  rate 
of  25.4  per  1000  before  the  war. 

And  at  the  same  time  the  birth  rate,  which  be- 
fore the  war  had  been  as  high  as  45  per  1  000,  had 
shrunk  in  1920  to  24.6  per  thousand.  So  that  the 
deaths  were  more  than  twice  as  great  as  the  births. 

This  shrinkage  of  about  30  per  1000  of  pop- 
ulation every  year  computed  over  the  entire  pop- 
ulation of  Soviet  Russia  would  show  a  loss  of  about 
3,930,000  people  a  year,  and  abundantly  explains 
the  decrease  of  15,000,000  population  in  about  3 
vears  of  Soviet  Rule. 


SOCIALISM  OR  INDIVIDUALISM  55 

More  than  half  the  .deaths  were  due  to  infectious 
diseases,  of  which  typhus  fever  accounted  for  27.4 
per  cent,  pneumonia  9.1  per  cent,  tuberculosis  6.5 
per  cent,  dysentery  4.6  per  cent  and  starvation  4.4 
per  cent. 

The  city  of  Orel  is  a  typical  example  of  the 
shrinkage  of  population.  It  had  in  1913  a  pop- 
ulation of  97,200  and  in  1920  the  population  was 
63,800,  or  a  loss  of  33,400,  which  is  more  than 
one-third.  In  1920  the  births  in  that  city  num- 
bered 1044  and  the  deaths  3559,  which  caused  a 
loss  of  2515  and  showed  that  they  were  dying 
more  than  three  times  as  fast  as  they  were  being 
reproduced.  These  vital  statistics  are  simply  ap- 
palling. The  old,  the  infirm,  the  young  children, 
the  feeble  and  the  invalids  all  die  in  increasing 
numbers  under  these  conditions. 

Since  this  census  was  taken,  the  great  famine  in 
the  Volga  region  took  place,  in  which  millions  per- 
ished by  actual  starvation  and  the  population  re- 
verted to  cannibalism  in  many  places.  Also  three 
great  epidemics  took  place,  one  of  typhus  fever 
in  which  Dr.  Copeland,  who  visited  the  stricken 
area  last  summer,  estimated  that  there  had  been 
millions  of  cases  of  typhus  with  a  large  percentage 
of  mortality,  another  of  Asiatic  Cholera  and  dysen- 
tery and  another  of  influenza  with  its  accompanying 
pneumonia.  All  these  reaped  their  harvest  of  death. 

Only  the  strongest  individuals  are  able  to  survive 
in  the  acute  conditions  of  misery  which  pervail.  The 


56  SHADOW    OR    SUBSTANCE 

population  of  Petrograd  which  was  over  2,000,000 
before  the  war,  had  shrunk  to  about  600,000  in 
1921  and  all  the  other  cities  except  Moscow,  the 
capital,  were  falling  into  similar  decay,  actually  dy- 
ing before  our  eyes.  This  process  is  continuing  and 
Russia  is  reverting  to  a  primitive  peasant  nation 
such  as  it  was  in  the  1  6th  century.  Under  that  con- 
dition it  will  not  be  able  to  support  more  than  about 
40,000,000  people  in  the  whole  empire  and  all  the 
other  100,000,000  people  will  be  superfluous  and 
have  to  die  by  misery,  disease,  famine,  pestilence, 
murder  or  cannibalism.  And  yet  the  friends  of  Soviet 
Russia  are  trying  to  persuade  us  that  all  is  well  in 
this  wonderful  Utopia  and  that  we  should  make 
haste  to  imitate  them  and  get  into  the  same  con- 
dition. 

In  the  United  States  1  00,000,000  people  are  able 
to  live  only  because  of  the  regular  process  of  pro- 
duction and  distribution.  The  sudden  interruption 
of  these  and  the  destruction  of  our  modern  indus- 
trial organization  would  undoubtedly  condemn  mil- 
lions upon  millions  of  our  people  to  death  in  some 
form  or  other.  Under  a  more  primitive  peasant  or- 
ganization our  country  would  support  only  a  scant 
20,000,000  people  and  the  other  80,000,000  peo- 
ple would  be  superfluous  and  have  to  perish.  Such 
a  result  would  be  the  most  appalling  catastrophe 
that  has  ever  taken  place  in  human  history,  and  yet 
there  are  a  few  deluded  radicals  who  are  thought- 
lessly and  carelessly  trying  to  bring  it  about. 


SOCIALISM  OR  INDIVIDUALISM  57 

To  apply  a  well  known  parable:  "And  Satan 
(personifying  the  powers  of  evil)  took  a  people  up 
on  a  mountain  and  spread  before  them  a  mirage  of 
wealth  and  luxury  and  said,  "All  these  are  yours 
if  you  will  bow  down  and  worship  me."  But  Jesus, 
in  a  similar  situation,  replied:  "Get  thee  behind 
me,  Satan;  what  does  it  profit  a  man  to  gain  the 
whole  world  if  he  lo.ses  his  own  soul?" 

This  greatest  of  ethical  teachers  knew  that  the 
victim  only  imagines  that  he  is  going  to  gain  the 
whole  world  when  he  sacrifices  his  own  soul  for  it* 
In  reality  he  is  being  double  crossed  by  the  forces  of 
evil,  and  he  loses  not  only  his  own  soul,  but  every- 
thing else  along  with  it,  and  reaps  a  harvest  of 
death  besides. 

The  Russian  Bolsheviki,  however,  yielded  to  the 
temptation  and  reached  out  for  the  ignis  fatuus  of 
plunder,  and  behold!  the  mirage  vanished  and  the 
alluring  plunder  turned  like  the  apples  of  Sodom  to 
dust  and  ashes  at  their  touch. 

But  some  radicals  may  object  that  they  do  not 
desire  to  go  to  the  extremes  of  the  Bolsheviki  and 
that  they  only  desire  to  bring  about  their  system  by 
moderate  steps.  In  other  words,  they  will  make 
it  less  painful  by  cutting  off  the  dog's  tail  an  inch 
at  a  time  instead  of  at  one  stroke. 

The  Inevitable  Result  of  Revolution. 

Let  no  one  deceive  himself  on  this  point.  When 
a  revolution  is  under  full  headway  it  is  inevitable 
that  it  will  go  to  the  utmost  extremes.  In  a  gen- 


68  SHADOW    OR    SUBSTANCE 

eral  state  of  popular  excitement  it  is  certain  that 
the  most  excited  will  come  out  on  top.  The  orators 
who  advocate  moderation,  restraint  and  common 
sense,  will  not  be  considered  eloquent.  They  will 
likely  receive  rotten  eggs  and  brickbats  rather  than 
applause,  and  the  frenzied  paranoiacs  or  dema- 
gogues will  be  acclaimed  as  the  real  leaders.  The 
name  Bolsheviki  means  those  that  demand  the  max- 
imum, the  extremists.  When  the  Czar  was  over- 
thrown by  the  revolt  of  the  army,  it  was  not  only 
his  government  that  was  overthrown,  it  was  the 
whole  authority  of  law,  the  basis  of  the  whole  so- 
ciety. Everybody  felt  at  once  that  he  was  free 
from  all  the  restraints  imposed  on  him  previously. 
The  whole  of  Russia  became  a  debating  society  on 
every  street  corner,  and  it  was  inevitable  that  final- 
ly those  who  were  most  frenzied  and  who  prom- 
ised the  most  should  be  carried  into  power  by  the 
populace. 

No  workman  could  understand  why  he  should 
work  now  that  he  was  free.  They  were  compelled 
to  work  under  the  Czar,  then  what  was  the  use 
of  being  free  if  they  had  to  work  just  the  same 
after  getting  rid  of  the  Czar? 

All  taxes  ceased  to  be  paid  because  the  tax  gath- 
erers were  regarded  as  the  agents  of  the  Czar  and 
the  new  government  had  to  sustain  itself  by  issues 
of  unlimited  paper  money. 

The  weak  Kerensky  and  his  colleagues  imagined 
that  they  could  hold  the  revolution  in  moderation 


SOCIALISM  OR  INDIVIDUALISM  59 

while  they  built  up  the  new  government,  but  it  was 
an  idle  dream.  The  only  way  that  this  could  have 
been  done  was  to  at  once!  sternly  restore  the  su- 
premacy of  tba  law  and  they  were  partly  unwilling 
and  partly  unable  to  do  that. 

The  parlor  radicals,  who  talk  so  lightly  of  rev- 
olution,  should  seriously  reconsider  their  conclu- 
sions. A  revolution  which  merely  transfers  polit- 
ical  power  from  one  group  to  another  must  not  be 
confounded  with  one  which  completely  sweeps 
away  all  the  authority  of  law  on  which  the  whole 
social  structure  rests.  Such  a  revolution,  once  set 
in  motion,  gathers  momentum  and  is  not  easily 
checked  until  the  whole  nation  is  hurled  into  the 
abyss.  As  the  great  philosophic  historian  Macau- 
lay  pointed  out,  once  a  nation  is  started  on  that 
downward  course  there  is  nothing  to  stop  it  except 
the  accidental  appearance  of  a  superman.  Either 
a  Caesar  or  Napoleon  will  seize  the  reins  of  power 
and  restore  order  or  else  both  civilization  and  lib- 
erty will  perish  and  we  will  be  as  fearfully  ravaged 
by  the  barbarians  of  the  twentieth  century  as  Rome 
was  in  the  fifth.  With  the  only  difference  that  the 
Huns  and  Vandals  who  ravaged  Rome  came  from 
without  while  our  barbarians  will  come  from  within 
our  very  midst,  for  in  the  vicinity  of  our  finest  edi- 
fices, within  the  very  shadow  of  our  noblest  cathed- 
rals lurk  savages  fiercer  than  any  who  followed 
Genseric  and  barbarians  more  terrible  than  those 
led  by  Attila. 


CHAPTER  HI. 

CAPITALISM. 

Exploitation  or  Construction. 

When  law  and  order  are  restored  in  Russia,  if 
men  with  capital,  energy  and  enterprise  will  go  into 
Russia,  buy  the  ruined  factories,  organize  industry 
into  efficient  working  order  and  get  the  people  to 
work  steadily  at  a  wage  which  conditions  will  jus- 
tify, leaving,  of  course,  a  profit  for  themselves,  will 
they  be  exploiting  or  benefitting  the  working  peo- 
ple? Is  the  man  who  takes  that  risk  and  undergoes 
that  worry,  trouble  and  personal  effort  entitled  to 
a  profit  or  not?  Does  the  profit  come  out  of  the 
worker  or  does  it  come  out  of  the  greater  efficiency 
of  industry? 

Does  a  system  which  enables  a  worker  to  work 
at  a  wage  greater  than  he  could  make  working  for 
himself,  exploit  or  benefit  him? 

Less  than  twenty-five  per  cent  of  the  world's 
people  live  in  fully  developed  capitalist  countries 
and  it  is  precisely  in  these  that  the  wages  are  high- 
est and  that  the  general  well  being  of  the  people 
is  incomparably  better  than  in  the  balance  of  the 
world. 

.  Capital  multiplies  the  productive  power  of  human 
labor,  it  expresses  itself  in  power-driven  machinery 
and  efficient  industrial  development,  and  gives  a 


SOCIALISM  OR  INDIVIDUALISM  61 

nation   an   abundance   of   everything   conducive  to 
human  welfare. 

Will  anybody  contend  that  the  workers  are  not 
benefited  by  this  as  much  or  more  than  any  one 
else? 

Workers  Benefited  by  Capitalism. 

According  to  the  United  States  Census  Reports 
of  1910,  Vol.  VIII,  page  129,  there  was  then  used 
by  the  manufacturers  of  this  country  power-driven 
machinery  amounting  to  18,675,376  horse-power, 
which  was  their  property.  It  is  estimated  that  this 
machinery  did  work  equivalent  to  that  of  90,000,- 
000  men  working  by  hand. 

That  report  also  tells  us  that  these  manufacturers 
at  that  time  had  6,500,000  working  men  employed 
by  them.  So  that  the  manufacturers  may  be  said 
to  have  had  about  1 4  times  as  many  mechanical 
workers  with  steel  nerves  and  muscles  working  for 
them  as  they  had  human  workers.  Did  the  man- 
ufacturers get  1  4  times  as  much  of  the  product  as 
their  human  employees?  This  would  be  the  case  if 
they  got  the  full  benefit  of  their  ownership  of  their 
steel  machines.  But  this  is  far  from  being  the  true 
fact.  Instead  of  getting  fourteen  times  as  much, 
the  return  to  the  manufacturers  was  only  about 
half  as  much  as  the  wages  they  paid  to  their  working 
people. 

In  fact,  the  return  to  the  capitalist  manufacturers 
was  only  about  twelve  per  cent  on  their  invested 


62  SHADOW    OR    SUBSTANCE 

capital.  When  we  consider  that  machinery  be- 
comes worn  out  and  obsolete  in  a  few  years  and 
has  to  be  scrapped  on  an  average  every  ten  years, 
and  as  John  Stuart  Mill  said  in  his  political  economy 
that  capital  is  kept  in  existence  from  age  to  age 
not  by  preservation  but  by  perpetual  reproduction, 
and  that  every  part  of  it  is  used  and  destroyed  gen- 
erally very  soon  after  it  is  produced,  we  cannot 
consider  a  return  of  twelve  per  cent  annually  as 
anything  more  than  sufficient  margin  to  secure  the 
continuous  reoroduction  of  the  machinery  worn  out 
and  the  development  of  the  new  machinery  required 
by  invention. 

The  truth  is  that  this  margin  is  so  small  that  all 
the  manufacturers  have  to  exercise  unusual  vigi- 
lance, prudence  and  foresight  to  keep  it  on  the  right 
side  and  it  is  also  the  reason  why  so  many  of  them 
fail.  How  long  would  this  margin  last,  if  instead 
of  the  trained  experts  who  now  manage  the  factor- 
ies, we  would  turn  the  management  over  to  politic- 
ians elected  by  ballot?  How  long  would  it  take 
walking  delegates,  whose  specialty  is  eloquence 
rather  than  work,  to  turn  this  margin  into  a  deficit? 

Would  the  laborers  even  if  they  took  over  the 
factories  and  worked  for  themselves  be  able  to  get 
along  with  less  than  this  twelve  per  cent  margin? 
Let  us  compare  them  to  farmers,  who  are  mostly  now 
working  for  themselves,  and  yet  the  power  they 
use  in  production  in  the  shape  of  mules,  horses, 
oxen,  tractors,  etc.,  has  cost  them  much  more  than 


SOCIALISM  OR  INDIVIDUALISM  63 

twenty  per  cent.  We  cannot  avoid  the  conclusion, 
therefore,  that  the  lion's  share  of  the  benefit  from 
power-driven  machinery  has  gone  to  the  work- 
ing classes  and  that  by  far  the  greater  part  of  it, 
has  gone  into  increased  wages  for  them.  Fortu- 
nately, we  can  prove  this  by  actual  facts  beyond 
the  possibility  of  doubt. 

England's  Condition  in  1850  and  50  Years  Later. 

Let  us  compare  the  condition  of  England  in  1  850, 
when  Karl  Marx  began  writing  his  ''Capital"  and 
when  production  by  power-driven  machinery  was 
just  getting  under  full  headway,  and  its  condition 
fifty  years  later,  and  we  find  that  there  was  a  very 
remarkable  progress  in  all  the  arts,  sciences,  indus- 
try and  transportation.  Numberless  factories  were 
developed,  production  multiplied  many  fold,  and 
the  railroad  transportation  system  was  created  and 
developed  to  a  high  efficiency.  Transportation  by 
water  was  also  practically  re-created  by  the  build- 
ing of  immense  iron  steamships,  and  great  seaports 
were  constructed.  All  this  was  progress  in  a  high 
degree. 

Now  what  was  the  effect  of  all  this  on  the  work- 
ing masses  of  the  people? 

Judged  by  every  standard,  the  general  well  be- 
ing of  the  masses  of  the  people  was  very  much 
better  in  1901  than  it  was  fifty  years  before. 

If  the  general  level  of  wages  in  1851  be  taken  as 
the  standard  and  placed  at  1  00,  then  we  find  that 


64  SHADOW    OR    SUBSTANCE 

by  comparison  the  general  level  in  1901  would 
stand  at  181.7,  or  an  increase  of  81.7  per  cent,  and 
in  a  great  many  industries,  wages  had  more  than 
doubled.  The  deposits  of  the  savings  banks  deal- 
ing with  the  working  classes  increased  from  29,- 
000,000  pounds  sterling  in  1851  to  257,000,000 
pounds  sterling  in  1901,  an  increase  of  800  per 
cent.  The  friendly  societies,  which  had  barely 
started  in  1850  and  which  had  reached  a  capital 
of  only  14,000,000  pounds  sterling  in  1877,  had 
increased  to  45,000,000  pounds  sterling  in  1901. 

The  great  co-operative  societies  built  up  exclu- 
sively by  the  working  classes,  which  were  mere  in- 
fants in  1850,  had  increased  to  8,500,000  pounds 
sterling  in  1883,  and  still  further  increased  to  45,- 
350,000  pounds  sterling  in  1909. 

Inhabited  houses  increased  from  3,278,039  in 
1851  to  6,260,852  in  1901,  showing  a  very  con- 
siderable increase  of  families  occupying  separate 
houses. 

The  marriage  rate  is  a  fair  index  of  increased 
prosperity;  it  was  1413  per  100,000  in  1851  and 
1615  per  100,000  in  1901. 

But  the  clearest  demonstration  we  have  that  pov- 
erty had  decreased,  is  the  poor  law  statistics.  These 
show  that  the  percentage  of  paupers  in  1859  was 
41.8  per  1000  and  that  it  decreased  to  22.6  per 
1000  in  1905.  All  these  facts  are  found  in  the  En- 
cyclopedia Britannica  of  1910  under  the  titles  of 


SOCIALISM  OR  INDIVIDUALISM  65 

England  and  Charity  and  Charities  and  in  the  cen- 
sus reports  of  Great  Britain,  1851  and  1901. 

This  is  the  clearest  demonstration  that  the  work- 
ing classes  of  England  were  greatly  benefited  by  the 
development  of  power-driven  machinery  in  those 
fifty  years,  and  this  was  in  spite  of  the  fact  that  dur- 
ing that  same  period  the  population  of  England 
increased  from  17,927,607  in  1851  to  32,327,643 
in  1901,  in  an  area  of  58,324  square  miles,  or 
from  307  to  the  square  mile  in  1851  to  557  per 
square  mile  in  1901.  Under  ordinary  conditions 
this  enormous  increase  of  population  in  that  limited 
area  would  have  had  a  tendency  to  greatly  in- 
crease the  pressure  of  population  upon  the  land 
and  to  aggravate  the  condition  of  the  masses  and 
to  accentuate  pauperism,  but  this  was  entirely  over- 
come by  the  tremendous  development  of  industry 
and  the  benefits  which  it  brought  to  the  working 
classes. 

False  Statement  in  Propaganda. 

A  great  deal  of  the  propaganda  of  discontent  in 
this  and  other  countries  has  been  based  upon  the 
careless  thinking  and  preposterous  statements  of 
ignorant  agitators  which  nobody  has  taken  the  trou- 
ble to  contradict  with  the  true  facts.  One  of  the 
most  common  statements  made  and  repeated  every- 
where by  soap  box  orators  until  it  has  passed  for 
the  truth  is  that  the  wage  workers  in  this  country 
produce  about  six  times  as  much  as  they  receive  in 
wages  and  that  the  capitalist  class  receives  as  its 


66  SHADOW    OR    SUBSTANCE 

share  this  enormous  percentage  of  the  product,  and 
the  United  States  Census  is  given  as  authority  for 
this  statement. 

The  True  Facts  From  U.  S.  Census. 
On  page   1  29  of  Vol.  VIII  of  the  United  States 
Census  Reports   of    1910  we  discovered   how   ab- 
surdly false  this  statement  is  and  also  how  it  origi- 
nated.     It  gives  total  production  of  manufacturers 
in  1909  as  $20,672,051,870.00 
Total  expenses  of  manufactur- 
ers in  producing  said  prod- 
uct  $18,454,089,599.00 

Gross  balance  remaining  • 

to  manufacturers $  2,217,962.271.00 

The  total  expenses  are  divided  up  as  follows: 
Paid  out  for  the  raw  materials 

used  in  above  production.... $1  2,1  42,790,878.00 
Wages    paid    to   wasre-workers 

engaged  in  this  production..      3,427,037,884.00 
Salaries,   etc.,  and  other  over- 
head expenses 2,884,260,837.00 


Total :..$1 8,454,089,599.00 

Now  while  it  is  true,  as  we  see  above,  that  the 
gross  product  is  about  six  times,  in  value,  the  wages 
paid  to  the  wage  working  class,  yet  it  is  utterly  false 
to  draw  the  conclusion  that  the  capitalists  received 
that  as  their  share.  Before  that  gross  product  can 
be  produced  at  all,  the  raw  materials  must  be  bought 
and  paid  for,  all  the  other  expenses  have  to  be  met 


SOCIALISM  OR  INDIVIDUALISM  67 

and  the  wages  of  labor  have  to  be  paid.  The  cap- 
italist owners  therefore  receive  as  their  share  only 
the  net  return  after  all  these  expenses  are  deducted 
from  the  gross  product. 

The  ignorant,  dishonest  or  careless  soap  box  agi- 
tator never  stopped  to  analyze  these  figures  and 
either  overlooked  or  ignored  these  necessary  items 
of  expense  and  jumped  to  the  conclusion  that  the 
wage  working  class  were  creating  six  times  as  much 
wealth  as  they  were  receiving  in  wages. 

To  do  that  they  would  have  had  to  create  it  out 
of  nothinsr,  whereas  the  true  facts  are  that  the  en- 
tire manufacturing:  plant  took: 

Raw  material  worth $12,142,790,878.00 

And  converted  it  into  finished 

product  worth  $20,672,051,870.00 

And  therefore  added  a  value 
to  the  raw  material  amount- 
ing to  $  8,530,660,992.00 

In  creating  this  additional  val- 
ue, however,  and  in  selling 
the  product  certain  unavoid- 
able expenses  had  to  be  met. 
Taxes  paid  to  federal,  state 

and  municipal  governments.. $  351,309,449.00 
Rent  for  buildings,  factories 

and  warehouses  106,573,661.00 

Work  paid  for  under  contract          1  78,645,635.00 
Other  expenses,  rent  of  offices 
and  salesrooms,  rent  of  ma- 


68  SHADOW    OR    SUBSTANCE 

chinery,  royalties,  use  of  pat- 
ents, insurance,  advertising; 
traveling  expenses,  salesmen 
and  all  other  sundry  exp 1,309,157,125.00 


Total  of  these  expenses $    1,945,685,870.00 

Deducting  expenses  from  the..$   8,530,660,992.00 
We  have  the  net  value  added 

bv  manufacture 6,584,975,122.00 

This  net  value  added  by   the  process  of  man- 
ufacture was  divided  as  follows: 
Wages  paid  to  the  wage  earning 

class $3,427,037,884.00 

Salaries  to  other  classes  of  em- 
ployees, clerks,  salesmen, 
managers,  engineers,  book- 
keepers, experts,  officers  of 
corporation,  superintendents, 
etc $  938,574,967.00 


Total  wages  and  salaries  pd.$4,365,61  2,85  1 .00 
Return  to  capitalist  owners.... $2, 2  1  7,962,281 .00 
To  analyze  the  above  figures  graphically  in  per- 
centages  we  find   that  the   total   product   of  man- 
ufacture is  made  up  as  follows: 
60%    goes  to  raw  material; 

21  %    to  wages  of  labor  and  salaries  of  employees; 
8%    to  other  sundry  expenses,  such  as  taxes,  rent, 
insurance,  adv.  and  selling. 


89%    is  the  total  in  expenses,  and  that  the  owners 
get    1  1  %    of   the   total   production   as   profit. 


SOCIALISM   OR  INDIVIDUALISM  69 

But  this  11%  of  the  total  product  represents 
about  12%  on  the  total  capital  invested, 
which  was  about  $2,000,000,000  less  than 
the  annual  production. 

It  is  perfectly  evident  from  the  above  figures 
that  the  owners  of  the  factories,  far  from  receiving 
the  amazing  returns  claimed  by  the  socialists,  are 
actually  receiving  a  return  which  is  only  about  one- 
half  that  paid  to  all  their  employees.  This  return 
represents  only  about  1  2  %  on  the  capital  invested 
in  the  factories. 

Moreover,  on  page  1  30  of  the  same  volume  the 
census  statistician  informs  us  that  this  return  given 
above  did  not  take  into  account  the  depreciation  of 
the  plant  and  buildings  because  it  was  too  difficult 
to  compute  it  fairly  in  all  the  different  individual 
cases  and  that  this  return  would  have  to  be  con- 
siderably reduced  if  allowance  were  made  for  this 
depreciation  of  plant. 

In  other  words,  the  owners  of  the  factories  out 
of  their  return  of  1 2  %  had  to  take  care  of  de- 
preciation and  the  continual  reproduction,  repair 
and  replacement  of  their  machinery  and  plant.  It 
is  perfectly  evident  that  this  margin  is  no  more  than 
sufficient  to  accomplish  this  purpose  satisfactorily 
for  any  length  of  time,  taking  into  account  periods 
of  depression.* 

*  Author's  Note:  See  "Income  in  the  United  States,"  published 
by  The  National  Bureau  of  Economic  Research,  for  further  facts 
on  this  same  line  of  thought,  and  brought  down  to  a  more 
recent  date  up  to  and  including  1919. 


70  SHADOW    OR    SUBSTANCE 

It  is  also  perfectly  evident  that  viewed  broadly, 
over  a  long  period  of  time,  that  the  lion's  share 
of  the  benefit  of  power-driven  machinery  has  gone 
to  the  laboring  classes  in  increased  wages,  and  that 
they  could  not  have  secured  more  of  the  benefit 
ifj  they  themselves  had  owned  the  factories  from 

the  beginning. 

« 

Socialist  State  Must  Have  a  Surplus. 

Even  a  complete  socialist  state  could  not  get 
along  without  accumulating  a  surplus.  The  surplus 
— namely,  that  part  of  production  not  consumed 
each  year  and  saved  to  be  reinvested,  is  very  im- 
portant to  a  nation  and  it  would  be  just  as  im- 
portant to  a  socialist  government  as  it  is  under  cap- 
italism. Without  it  you  cannot  advance  one  step; 
no  new  improvement  to  transportation,  to  a  road,  to 
a  farm,  to  a  river,  to  a  harbor  or  to  a  factory  can 
be  made  without  a  surplus.  If  the  owners  have 
not  saved  up  a  surplus  themselves  to  make  the  im- 
provement, they  must  borrow  somebody  else's  sur- 
plus. But  the  surplus  must  be  available  some- 
where before  the  improvement  can  be  made.  The 
nation  that  would  consume  all  it  produces  year  by 
year  would  be  headed  straight  to  ruin.  It  could  not 
build  a  highway,  a  canal,  a  new  railroad,  or  any 
other  new  improvement.  The  Bolsheviki  delega- 
tion at  Genoa  proclaimed  loudly  that  Russia  was 
stuck  and  could  not  start  up  again  without  a  loan. 
What  does  this  mean  in  plain  language?  It  means 
that  her  surplus  was  all  gone,  all  exhausted,  stolen 


SOCIALISM  OR  INDIVIDUALISM  71 

or  destroyed  and  that  they  wanted  to  borrow  the 
surplus  accumulated  by  outside  people  in  order  to 
stait  up  again. 

So  that  even  a  socialist  state  would  have  to  save 
up  a  surplus  in  order  to  be  able  to  maintain  its  in- 
dustry, its  transportation,  and  its  general  condition 
up  to  the  requirements  of  advancing  civilization. 
To  do  this  it  could  not  possibly  pay  to  its  working 
classes  all  that  they  produced,  and  it  would  un- 
questionably have  to  deduct  fully  as  much  as  is  now 
deducted  under  capitalism. 

In  that  case  the  worker  could  not  possibly  get 
all  that  he  produced  and  could  not  get  more  than 
he  receives  under  capitalism. 

But  undei  the  socialist  regime  this  surplus  would 
have  to  accumulate  in  the  hands  of  the  political 
chiefs  at  the  head  of  the  government. 

Does  anybody  with  any  experience  believe  that 
these  politicians  would  prove  more  honest  than  the 
ones  we  are  now  familiar  with? 

Surplus  Under  Capitalism. 

Under  capitalism  this  surplus  accumulates  in  the 
hands  of  the  ones  who  own  the  factories.  They 
take  care  of  it  because  they  think  they  own  it, 
whereas  it  more  often  owns  them,  and  they  reinvest 
it  in  new  enterprises  which  benefit  the  whole  nation. 
From  the  point  of  view  of  national  welfare,  this 
saving  and  reinvesting  the  surplus  by  the  so-called 
wealthy  people  is  of  the  utmost  importance  and 


72  SHADOW  OR  SUBSTANCE 

overshadows  by  far  their  role  of  spenders  on  them- 
selves, which  is  insignificant  by  comparison. 

Even  the  ostentatious  and  foolish  spending  of  a 
few  idle  rich,  tho  condemned  by  all  serious  minded 
people,  is  not  without  some  measure  of  social  util- 
ity in  the  long  run. 

It  appeals  to  thousands  of  people  who  regard  it 
as  the  acme  of  pleasure  and  fills  them  with  the  am- 
bition to  get  rich  themselves  and  thus  stimulates 
them  to  extra  effort  and  to  save  in  order  to  reach 
that  supposed  happy  state.  These  efforts  are  ben- 
eficial to  production  as  a  whole  and  increase  the  na- 
tional income.  Moreover  it  quickly  separates  the 
fools  from  their  money  and  passes  it  into  more  use- 
ful hands. 


CHAPTER  IV. 

EXAMPLES  FROM  CHINA,  THE  PHILIPPINES 
AND  INDIA. 

The  Condition  of  China. 

Let  us  compare  this  country  with  China,  where 
capitalism  has  never  developed  beyond  the  most 
primitive  stage.  China  has  a  fertile  soil  and  great 
natural  resources,  but  they  have  few  tools,  poor 
transportation  and  little  machinery.  In  consequence 
production  is  feeble  and  wages  are  necessarily  low. 
Because,  1st  us  not  forget,  the  wages  of  labor  are 
paid  out  of  what  labor  itself  produces  and  when, 
therefore,  production  is  small,  wages  must  also  be 
small. 

Now,  would  it  rob  the  laborers  of  China,  if  cap- 
ital should  go  in  there  and  develop  efficient  power- 
driven  machinery,  production  and  transportation? 
Will  they  be  exploited  when  they  produce  sixty 
times  more  than  at  present  and  receive  forty-eight 
times  as  much  wages? 

The  Development  of  the  Philippines. 

We  have  the  answer  in  the  Philippines.  Ameri- 
cans with  capital,  brains  and  enterprise  went  in 
there,  though  our  government  did  everything  it 
could  to  discourage  them.  They  took  the  primeval 
jungle,  useless  to  man  or  beast,  drained  and  cleared 


74  SHADOW    OR    SUBSTANCE 

it  and  constructed  perfect  concrete  highways 
through  it,  built  splendid  villages  with  neat  cot- 
tages in  which  prosperity,  cleanliness  and  thrift 
have  taken  the  place  of  poverty,  squalor  and  shift- 
lessness,  substituted  pure  artesian  waterworks  for 
polluted  wells  and  springs,  built  factories,  club 
houses,  concrete  school  houses  and  theaters  and  es- 
tablished scientific  cultivation,  taught  the  workers 
how  to  really  work  and  multiplied  their  wages 
many  times.  Of  course,  they  did  it  to  make  a 
profit  for  themselves.  But  is  there  any  other  way 
that  we  could  have  gotten  them  to  work  for  those 
Filipinos?  Are  they  not  entitled  to  their  reward? 
Did  they  not  benefit  the  Filipinos  even  more  than 
themselves?  Is  this  exploitation?  Marx  says  yes, 
but  the  experience  of  mankind  says  no!  I  prefer 
to  call  it  enlightened  self  interest,  which  is  better 
and  more  durable  than  benevolence;  and  a  system 
which  puts  a  superior  man  under  the  impulse  of 
this  enlightened  self-interest  to  practically  toil  for 
the  benefit  of  a  multitude  of  his  fellow  creatures, 
and  elevate  and  civilize  them,  cannot  be  lightly 
condemned.  It  may  not  be  perfect,  but  it  is  far 
from  being  the  worst  system. 

Workers  in  India. 

A  letter  from  Calcutta,  India,  has  just  come  to 
my  notice,  in  which  the  writer  describes  the  wrap- 
ping of  a  small  bundle  weighing  about  ten  pounds, 
for  shipment  to  the  United  States.  Nine  men  were 
sent  to  do  this  job.  One  man  packed  the  box 


SOCIALISM  OR  INDIVIDUALISM  7" 

and  sewed  on  the  burlap;  two  men  helped  him, 
one  on  either  side,  to  hold  the  corners;  each  one 
of  these  had  an  assistant  standing  by  to  relieve  him 
if  he  got  tired  or  had  to  go  out.  They  were  ap- 
prentices learning  the  trade.  Another  man  was  the 
painter,  waiting  to  paint  on  the  address,  and  be- 
hind him  stood  his  assistant  carrying  his  little  tin 
of  paints  (three  inches  in  diameter)  and  a  palette 
three  inches  by  six  inches.  Over  all  these  stood  the 
Babu  or  foreman  giving  his  orders,  and  in  addition 
there  was  a  durwan  or  watchman  to  keep  them 
from  fighting  and  from  stealing  anything.  It  took 
those  nine  men  six  hours  to  finish  the  job  that  one 
American  packer  by  himself  would  have  accom- 
plished easily  in  an  hour. 

Is  it  any  wonder  that  the  wages  in  India  are  only 
a  few  cents  a  day?  They  produce  almost  nothing 
and  therefore  receive  almost  nothing  as  wages.  It 
is  worth  about  75  cents  to  pack  that  box. 

But  this  75  cents  has  to  be  divided  among  nine 
men  and  each  one  receives  only  a  few  cents  for 
his  labor.  If  one  man  can  do  it  by  himself  in  an 
hour,  he  is  a  valuable  man  to  his  employer,  and 
can  command  five  times  as  much  in  wages  as  the 
nine  combined. 

Now  if  we  wished  to  elevate  the  condition  of 
those  workmen  in  India,  the  first  thing  we  would 
have  to  do  is  to  educate  and  train  one  of  the  nine 
so  that  he  could  do  that  job  by  himself,  say,  in  five 


76  SHADOW   OR   SUBSTANCE 

hours.  Then  the  employer  could  afford  to  pay  him 
wages  of  one  dollar  a  day,  which  would  be  un- 
precedented for  that  country.  But  the  labor  leaders 
down  there  would  object  that  this  would  throw 
the  other  eight  out  of  employment.  This  is  per- 
fectly true.  It  would  deprive  the  other  eight  of  the 
job  of  doing  almost  nothing  and  receiving  almost 
nothing  as  pay,  and  if  we  stopped  at  those  partic- 
ular eight  it  would  be  a  hardship  on  them.  But  if 
we  extended  the  process  all  over  India,  it  would  be 
a  different  story. 

The  thousands  of  trained  workers  earning  one 
dollar  a  day  would  soon  have  many  wants.  They 
would  no  longer  be  satisfied  to  go  almost  naked 
with  only  a  rag  around  their  loins.  They  would 
want  to  protect  their  feet  with  sandals  and  their 
bodies  from  the  scorching  rays  of  the  sun.  Instead 
ot  having  less  than  five  dollars*  worth  of  house- 
hold goods  to  each  family  as  now,  they  would  want 
a  little  comfortable  bedding  and  a  few  articles  of 
convenient  furniture.  Instead  of  living  in  miser- 
able hovels  scarcely  fit  for  beasts,  they  would  de- 
sire a  more  comfortable  habitation.  Instead  of  al- 
most starving  on  a  few  grains  of  rice,  they  would 
want  better  food.  The  other  eight  thrown  out  of 
employment,  if  also  trained  efficiently,  could  pro- 
duce something  worth  while  and  receive  suitable 
wages  in  keeping  with  their  increased  production, 
because  wages  are  paid  only  out  of  production  and 
nothing  else.  Then  their  purchasing  power  and 


SOCIALISM   OR   INDIVIDUALISM  77 

wants  would  keep  pace  with  their  increased  wages 
and  there  would  be  an  active  demand  for  all  kinds 
of  commodities  and  millions  of  workers  would  be 
kept  busy  at  good  wages  in  producing  them.  This 
increased  production  all  over  the  nation  would  ne- 
cessitate better  buildings,  better  factories,  better 
transportation,  better  facilities  for  distribution  and 
all  the  other  facilities  of  what  we  call  civilization. 
All  this  would  require  a  surplus,  but  this  surplus 
would  be  there  because  it  would  be  steadily  ac- 
cumulated from  the  profits  of  all  those  great  works. 
To  D^oduce  all  these  things  millions  of  workers 
would  have  to  be  emoloyed  and  there  would  be  an 
active  demand  for  laborers  of  all  kinds.  There 
would  be  an  actual  scarritv  of  labor  instead  of  mil- 
lions of  unemploved.  This  scarcitv  of  labor  would 
automatically  advance  wages,  which  would  neces- 
sarily keep  pace  with  increasing  production.  This 
tremendous  increase  of  production  in  the  whole  na- 
tion would  radiate  prosperity  on  every  hand,  but 
first  and  foremost  it  would  be  reflected  in  the  in- 
creased well-being,  physical,  moral  and  spiritual  of 
their  working  classes,  who  would  unquestionably 
get  the  lion's  share  of  it.  In  fact,  the  improve- 
ment could  not  take  place  at  all  if  they  did  not  get 
the  greatest  part  of  it.  It  has  to  start  with  them 
and  is  based  on  them. 

What,  then,  may  I  ask,  keeps  the  workmen  of 
India  from  enjoying  this  prosperity?  What  keeps 
them  in  a  poverty  so  terrible  that  our  imaginations 
can  scarcely  picture  it? 


78  SHADOW  OR  SUBSTANCE 

The  answer  is  ignorance,  pure  and  simple.  It  is 
impossible  in  a  short  space  to  show  all  the  ramifi- 
cations of  it.  To  go  back  to  my  illustration  (which, 
it  must  be  understood,  I  use  only  in  a  broad,  gen- 
eral sense) .  Those  workmen  imagine  that  they  are 
cheating  their  employer  by  compelling  him  to  em- 
ploy nine  men  to  do  the  work  that  one  could  easily 
do.  In  their  stupidity  they  cannot  see  that  they 
are  also  compelling  him  to  pay  to  all  the  nine  the 
same  wage  that  one  man  should  get.  By  the  rules 
of  their  guild,  which  compel  nine  men  to  produce 
onlv  what  one  man  could  do,  they  limit  each  one 
of  the  nine  men  to  receive  only  one-ninth  of  the 
wages  which  one  man  ought  to  receive. 

They  limit  their  workers  to  one-ninth  of  a  real 
man's  production,  but  they  also  reduce  them  to 
one-ninth  of  a  real  man's  wages.  In  a  word,  they 
are  simply  cheating  themselves  and  standing  in  their 
own  light. 

I  have  no  doubt  that  they  would  kill  the  enter- 
prising worker  who  tried  to  do  a  real  man's  work, 
on  the  ground  that  he  was  a  detriment  to  the  union, 
and  there  is  no  doubt  that  they  would  break  up  any 
labor-saving  machinery  that  anybody  tried  to  in- 
troduce in  the  belief  that  it  would  take  work  away 
from  them.  We  can  well  laugh  at  the  stupidity  of 
these  Hindus,  but  let  us  not  congratulate  ourselves 
too  much,  because  the  workmen  of  more  civilized 
lands  are  not  altogether  free  from  the  same  kind  of 
stupidity.  More  than  once  our  workmen  have  de- 


SOCIALISM   OR  INDIVIDUALISM  79 

stroyed  or  refused  to  use  labor-saving  machinery 
for  the  same  reason,  and  our  labor  unions  every- 
where, especially  in  the  building  trades,  have  tried 
to  limit  the  output  of  work  so  as  to  compel  their 
employers  to  employ  two  men  to  do  the  work  that 
one  could  easily  do.  They  seem  ignorant  of  the 
economic  law  (as  inexorable  as  the  law  of  gravity) 
that  if  two  men  do  only  the  work  of  one,  it  will 
onlv  be  a  question  of  time  when  the  two  together 
will  only  receive  one  man's  pay.  Either  the  cost  of 
living  and  the  rents  will  ero  un,  so  that  the  value  of 
their  dollar  will  onlv  be  fifty  cents,  or  thev  will 
stand  idle  most  of  the  time.  It  is  imoossible  for 
an  emplover  to  pav  his  workmen  more  .than  triev 
produce  without  going  broke  himself  and  ceasing 
to  be  an  employer. 

The  workers  who  imagine  that  they  can  increase 
their  wa^es  bv  limiting  nroduction,  sabotaere  and 
other  destructive  methods,  are  as  ignorant  as  the 
Hindus  I  have  mentioned  and  are  simply  cheating 
themselves. 

The  opposite  course  of  increasing  production  is 
the  true  way.  The  man  who  discovers  a  way  by 
which  one  man  can  do  the  work  which  now  requires 
two  will  surely  increase  wages.  This  is  the  way  that 
wages  were  increased  in  the  past.  It  .was  the  in- 
vention of  labor-saving  machinery  which  did  it. 
On  the  other  hand,  if  we  should  suddenly  destroy 
all  the  labor-saving  machinery  in  this  country,  pro- 
duction would  immediately  dwindle  to  a  small  frac- 


80  SHADOW   OR  SUBSTANCE 

tion   of   its   present  volume   and   wages   would,    of 
course,  have  to  shrink  in  proportion. 

As  our  people  would  not  quickly  adjust  them- 
selves to  the  chronic  misery  of  the  Hindus,  millions 
of  them  would  perish.  Labor-saving  machinery, 
therefore,  is  what  stands  between  us  and  indescrib- 
able disaster. 

But  labor-saving  machinery  is  the  result  of  sur- 
plus. It  is  surplus  that  builds  it  up  and  reproduces 
it  when  worn  out.  Surplus  stands  in  relation  to 
labor-saving  machinery  as  the  parent  does  to  the 
child.  No  surplus,  no  labor-saving  machinery. 

But  surplus  is  capitalism. 

It  is  only  another  name  for  it. 

But  the  socialists  say  we  are  not  going  to  destroy 
labor-saving  machinery,  we  are  only  going  to  ap- 
propriate it.  Perfectly  true,  but  they  have  de- 
nounced the  surplus  and  have  proposed  to  abolish 
it.  This  would  also  soon  indirectly  cripple  labor- 
saving  machinery.  As  Shylock  said  in  Shake- 
speare's play:  "You  take  my  life,  if  you  do  take 
from  me  the  means  by  which  I  live." 

But  recently  the  socialists  say  we  must  maintain 
the  surplus  in  order  to  maintain  the  efficiency  of  pro- 
duction. In  that  case  the  worker  would  get  nothing 
more  than  he  does  now  and  the  only  change  that 
they  would  make  would  be  in  those  who  would 
hold  and  handle  the  surplus.  Under  the  present 


SOCIALISM  OR  INDIVIDUALISM  81 

system  it  falls  in  the  hands  of  those  who  develop 
exceptional  genius,  management,  ability  or  industry 
by  a  process  of  natural  selection.  Under  socialism 
they  would  be  the  walking  delegates  elected  by  the 
workers.  I  fail  to  see  how  that  would  improve 
conditions  in  the  least.  If  there  is  anything  that  ex- 
perience has  clearly  demonstrated  in  this  country, 
it  is  that  the  iudgment  of  the  masses  in  electing  of- 
ficials by  ballot  is  exceedingly  poor.  Our  elected 
representatives  have  usually  been  those  whom  any 
prudent  man  would  not  entrust  with  his  own  busi- 
ness. How  then  can  we  expect  the  surplus  to  be 
any  safer  or  better  managed  in  their  hands  ? 

One  word  more  in  regard  to  exploitation. 

Some  radicals  have  asserted  that  American  cap- 
ital must  not  be  allowed  to  exploit  weaker  people 
like  the  Mexicans,  Chinese,  Filipinos,  Hindus,  etc. 
How  is  it  possible  to  exploit  the  Hindus  in  their 
present  condition?  They  have  nothing  that  any- 
body can  take  away  from  them  and  have  them  con- 
tinue to  live.  If  American  capital  went  there  to 
make  a  profit  (which  is  what  they  mean  by  ex- 
ploitation), it  would  first  have  to  get  them  to  pro- 
duce something.  It  would  have  to  improve  their 
methods  of  production,  transportation  and  distri- 
bution so  that  they  would  have  a  surplus  worth 
while.  Would  not  this  benefit  the  Hindus  more 
than  anybody  else?  This  leads  me  to  ask  the  ques- 
tion, "What  is  the  chief  thing  that  stands  in  the 
way  of  progress  the  world  over?"  The  answer  ia. 


82  SHADOW  OR  SUBSTANCE 

"Lack  of  intelligence/'  or,  in  one  word,  ignorance. 
The  evil  passions  of  envy,  jealousy,  malice,  hatred, 
prejudice,  perversity  and  greed  are  contributing 
factors,  but  in  a  broad  sense  ignorance  is  more  or 
less  the  mother  of  all  that  evil  brood. 


CHAPTER  V. 

POLITICAL  DEFECT  OF  SOCIALISM. 

But  the  most  fatal  defect  of  socialism,  I  have  yet 
to  mention.  All  the  difficulties  I  have  pointed  out 
above  are  economic,  there  remains  the  political  de- 
fect, which  is  the  greatest  of  all.  AH  those  who 
have  read  the  preceding  pages  will  perceive  that  the 
first  political  effect  of  socialism  is  to  increase 
enormouslv  the  power  of  the  state.  It  multiplies 
bv  manv  times  the  number  of  people  directly  em- 
ploved  by  the  state  and  therefore  dependent  on 
the  state  for  their  salaries,  their  emoluments  and 
authority  over  those  under  them.  In  every  branch 
of  industry,  transportation  or  agriculture  in  every 
hamlet  in  the  land,  there  will  be  swarming  thou- 
sands of  commissars  directly  under  the  control 
of  the  head  officials  of  the  state.  In  Moscow  alone 
there  are  over  half  a  million  petty  officials  of  the 
Soviet  Government  on  the  payroll. 

And  the  Soviet  has  more  employees  than  any 
other  government  on  earth  has  ever  had.  Every 
one  of  these  petty  officials  will  be  interested  in 
holding  his  job,  because  to  lose  it  means  to  get  re- 
duced into  the  same  condition  as  the  people  under 
him.  Self  preservation  alone  will  make  him  cling 
to  power  as  a  drowning  man  grasps  at  a  straw. 

They  can  therefore  be  relied  on  to  support  the 
chiefs  higher  up  with  fidelity  and  zeal  and  they  will 


84  SHADOW  OR  SUBSTANCE 

form   a   political   machine,    the   like    of   which   has 
never  before  been  seen  on  this  earth. 

Political  Change  Impossible  Under  Socialism. 

As  the  individual  voters  under  them  are  abso- 
lutelv  at  their  mercy  and  can  be  injured  or  ber»e~ 
fiteoT  bv  their  favor,  there  is  no  doubt  that  the 
partv  in  power  will  remain  there  as  lon<»  as  th^v 
like.  The  fact  is  that  I  fail  to  see  whv  thev  should 
even  waste  the  time  to  hold  an  election.  Thev 
ronld  "?«t  as  well  register  the  result  beforehand  as 
tbev  used  to  do  in  Mexico,  under  Diaz.  Moreover, 
with  the  abolition  of  private  propertv,  everv  news- 
paper, everv  rmntinor  press  and  everv  other  means 
of  communiratin*?  ideas  to  the  people,  becomes  the 
propertv  of  the  state  and  it  becomes  impossible  for 
anvbodv  opposed  to  the  government  to  e'et  anv- 
thinpr  printed  or  circulated.  Ill-advised  activity 
against  the  head-men  would  be  no  doubt  followed 
by  the  arrest  and  disappearance  of  the  agitator  and 
nobodv  would  be  the  wiser  except  a  few  near 
friends  or  relatives,  because!  no  news  of  it  would 
ever  leak  out.  The  only  newspapers,  books  or 
pamphlets  published  will  be  under  the  control  of 
the  head  officials  of  the  government  and  they  will 
give  the  people  whatever  they  see  fit  to  mould  their 
opinions.  The  opposition  can  never  be  heard  un- 
der that  scheme.  Preachers,  teachers,  doctors,  law- 
yers, etc.,  will  all  be  officials  of  the  government  and 
hold  their  jobs  under  the  pleasure  of  their  chiefs. 
Has  any  machine  as  powerful  as  that  ever  been  seen 


SOCIALISM   OR  INDIVIDUALISM  85 

on  this  planet?  This  is  the  reason  that  it  has  been 
impossible  to  oust  Lenin,  Trotsky,  and  their  clique 
in  Russia;  in  spite  of  all  their  crimes.  They  are 
many  times  more  powerful  than  the  Czar  ever  was. 

Marx  and  Engels  foresaw  this  difficulty  and  tried 
to  meet  it  by  maintaining  that  the  state,  as  we 
know  it,  will  have  ceased  to  exist  and  that  the  so- 
cialist state  will  be  more  democratic  and  more  un- 
der the  control  of  the  people.  I  fail  to  see  how. 
Admitting  that  the  socialist  state  might  start  out  as 
a  democracy  with  the  best  intentions,  would  it  re- 
main faithful  to  its  original  ideals?  Has  anybody 
ever  had  power  on  this  earth  without  abusing  it 
sooner  or  later?  The  first  founders  of  the  move- 
ment might  be  honest,  well  meaning  altruists,  but 
they  would  in  due  course  of  time  be  succeeded  by 
a  Napoleon,  a  Cromwell  or  a  Ceasar  and  they  in 
turn  by  a  Nero,  a  Caligula,  or  a  Heliogabolus,  and 
nobody  could  ever  dislodge  them  except  by  assas- 
sination. 

The  Split  Between  Marx  and  Proudhon. 

This  was  the  point  which  caused  the  split  be- 
tween Proudhon  and  his  disciple  Bakunin  on  the 
one  hand  and  Marx  and  Engels  on  the  other.  Proud- 
hon told  Marx  plainly  that  his  system  would  estab- 
lish a  despotism  that  would  make  every  other  one 
that  has  ever  preceded  it  on  this  earth  pale  into 
insignificance  when  compared  to  it.  Time  has  dem- 
onstrated that  Proudhon  was  right  and  that  Marx 


86  SHADOW   OR   SUBSTANCE 

was  wrong  and  the  Bolsheviki  in  Russia  have  de- 
veloped as  atrocious  a  tyranny  as  ever  disgraced 
this  planet.  Considering  all  the  facts  which  have 
come  to  our  knowledge  from  perfectly  disinterested 
observers  and  from  sources  even  favorably  inclined 
to  the  Bolsheviki,  it  is  perfectly  evident  that  the 
Bolsheviki  have  been  much  worse  than  even  the 
unintelligent  despotism  of  the  Czar's  regime,  and 
it  is  doubtful  if  there  has  ever  been  in  the  past  a 
government  at  the  same  time  so  tyrannical  and  so 
inefficient  as  the  present  Russian  Soviet. 

Judging  it  by  the  ordinary  standards  of  civilized 
nations,  we  find  instead  of  security  of  life,  of  per- 
son, freedom  of  individual  effort  and  the  enjoy- 
ment of  the  fruits  thereof  that  wholesale  robbery, 
rape,  and  murder  are  the  daily  vicissitudes  of  life  in 
this  boasted  Utopia.  Both  Bertrand  Russell  and  H. 
G.  Wells,  the  English  radicals  and  former  Socialists 
and  the  American  relief  workers  all  reported  that 
conditions  in  Russia  were  awful.  There  is  chronic 
continuous  hunger  among  all  the  people.  Tram- 
ways have  practically  ceased  to  operate  in  the 
cities.  The  railroads  are  crumbling  into  ruin  from 
lack  of  necessary  repairs.  The  streets  are  decayed, 
torn  up  and  impassible.  The  sewerage  systems 
have  collapsed,  the  water  pipes  have  been  bursted 
by  the  cold  of  winter  and  filth  and  unsanitary  condi- 
tions are  prevalent  everywhere  and  the  great  masses 
of  the  people  are  suffering  hideous  and  frightful 
misery. 


SOCIALISM  OR  INDIVIDUALISM  87 

There  is  no  such  thing  as  the  slightest  personal 
liberty  in  Russia  today.  The  peasant  is  forced  to 
yield  much  of  his  crops  to  the  state  without  receiv- 
ing any  equivalent  therefor  except  worthless  paper 
roubles.  Moreover,  he  is  drafted  to  compulsory 
labor  and  forced  to  do  the  most  menial  work  of  the 
crudest  kind.  The  workman  in  the  cities  is  bound 
to  his  factory  or  mine,  his  remuneration  is  fixed  by 
his  overseer,  the  commissar  of  the  state.  He  can- 
not move  without  a  permit  from  the  labor  bureau 
controlled  by  the  state.  He  is  forbidden  by  the 
Bolsheviki  from  even  going  on  a  strike  which  is 
considered  an  act  of  rebellion  against  their  au- 
thority, and  every  one  of  their  labor  unions  have 
been  suppressed  and  abolished  by  these  tyrants. 

Corruption  is  rife  among  officials  who  are  bribed 
constantly  to  do  anything.  Even  food,  the  life- 
giver,  is  not  handled  on  a  just  and  fair  basis,  but 
used  as  a  weapon  in  social  and  political  struggles. 

Then  on  top  of  all  this  they  have  the  infamous 
and  dreaded  Tcheka,  or  extra- ordinary  commission 
of  justice  with  unlimited  and  arbitrary  power.  It 
searches  houses  at  its  pleasure,  it  raids  market 
places,  it  arrests  citizens  on  mere  suspicion  and 
maintains  a  list  of  so-called  suspicious  persons  and 
puts  them  into  jail  on  the  slightest  provocation.  It 
keeps  men  and  women  for  months  in  solitary  con- 
finement without  even  preferring  any  charge  against 
them.  It  tries,  condemns  and  executes  them,  with- 
out so  much  as  the  victim  knowing  what  it  is  for  or 


88  SHADOW   OR   SUBSTANCE 

having  the  slightest  opportunity  to  defend  himself. 
This  Tchecka  is  far  more  terrible  and  irresponsible 
than  the  revolutionary  tribunals  were  in  the  French 
Revolution  and  its  like  has  never  been  seen  any- 
where else  on  this  earth. 

There  is  no  political  freedom  in  Russia  today. 
Not  only  the  bourgeois  parties  are  under  the  ban, 
but  even  all  the  outspoken  radical  parties,  the  men- 
sheviki,  the  social  revolutionists,  the  social-demo- 
crats, etc.,  are  all  deprived  of  any  means  to  make  a 
political  campaign,  they  are  forbidden  to  issue  any 
newspapers,  magazines,  pamphlets  and  leaflets  or 
to  call  any  open  meeting  of  any  sort. 

The  claim  by  the  friends  of  Soviet  Russia  that 
Bolshevism  is  the  government  chosen  by  the  Russian 
people  is  ridicuously  false.  Numerically  the  com- 
munists only  muster  a  few  hundred  thousand  mem- 
bers which  is  less  than  one-half  of  one  per  cent  of 
the  population  of  Russia.  The  Bolsheviki  broke  up 
and  dispersed  by  violence,  the  Douma  which  had 
been  elected  as  a  constituent  assembly  in  a  free  and 
unhampered  election  and  which  was  fairly  repre- 
sentative of  the  Russian  people  and  for  that  very 
reason  was  overwhelmingly  against  the  bolsheviki. 
It  is  a  fact  admitted  by  the  Bolsheviki  themselves 
that  if  a  free  and  impartial  election  were  held  in 
Russia  at  the  present  time  they  would  be  in  a  hope- 
less minority  and  that  is  the  very  reason  that  they  do 
not  and  will  not  have  such  an  election. 


SOCIALISM   OR   INDIVIDUALISM  89 

Lenin  and  the  Bolshevist  leaders  have  always 
frankly  declared  that  they  do  not  believe  in  the 
democratic  rule  of  the  majority  of  the  people.  They 
have  openly  expressed  their  contempt  for  the  peo- 
ple, whom  they  call  ignorant,  unenterprising  and 
"lethargic."  They  have  relentlessly  put  into  prac- 
tice Lenin's  "Theory  of  Minority  Revolution  and 
Minority  Rule." 

Wherever,  by  some  chance,  an  important  Soviet 
has  been  elected  with  a  majority  against  them,  or 
has  had  the  temerity  to  vote  against  them,  they 
have  promptly  suppressed  it  with  an  iron  hand. 
Yaroslav,  a  large  industrial  city  north  of  Moscow, 
and  Krasnoyarsk,  another  important  place,  elected 
Soviets  with  Mensheviki  and  Social  Revolutionary 
majorities  against  the  Bolsheviki.  Lenin  promptly 
pronounced  them  Counter-Revolutionists  and  unfit 
for  self-government  and  abolished  their  Soviets  al- 
together. Every  attempt  in  those  places  to  organ- 
ize self-government  after  that  was  sternly  suppressed 
in  blood. 

The  dictatorship  of  the  proletariat  therefore  does 
not  mean  self  government  by  the  majority  of  the 
people  or  government  deriving  its  just  powers  from 
the  consent  of  the  governed;  it  means  the  tyranny 
of  a  comparatively  small  minority  over  the  balance 
of  the  nation.  It  does  not  establish  a  free  repres- 
entative, republican,  or  democratic  form  of  govern* 
ment  as  the  western  nations  understand  it;  it 
establishes  the  oligarchy  of  a  small  ruling  class,  not 


90  SHADOW  OR  SUBSTANCE 

much  more  numerous  than  the  ruling  class  of  the 
Czar's  regime,  but  far  more  energetic  and  more 
closely  organized  and  exercising  a  more  relentless 
tyranny. 

A  small  minority  which  forces  its  will  upon  the 
majority  of  a  nation  must  always  be  tyrannical  be- 
cause that  is  the  only  way  it  can  accomplish  its 
purpose. 

The  Ray  of  Hope  in  That  Terrible  Condition. 

But  we  must  not  imagine  that  there  is  no 
silver  lining  even  to  that  apparently  terrible  situa- 
tion. The  great  philosopher  Goethe  said  that  the 
best  proof  we  have  of  a  supervising  intelligence  in 
the  universe  is  that  He  is  able  to  turn  eventually  into 
good  what  man  has  intended  as  evil.  No  doubt 
from  the  present  Bolshevism  a  better  condition  may 
eventually  emerge  in  Russia,  even  as  from  the  ter- 
rible frenzy  of  the  French  Revolution  a  new  French 
nation  developed  with  higher  principles  of  justice 
and  equality;  because  one  of  the  results  of  the 
French  uphpeaval  was  the  dividing  up  of  the  land 
of  the  nobility  and  clergy  amongst  the  peasants  who 
were  the  real  cultivators  of  the  soil  and  the  creation 
of  a  nation  of  peasant  proprietors.  The  same  land 
distrbution  has  taken  place  in  Russia  and  in  time 
these  new  peasant  owners,  who  are  the  immense 
majority  of  the  people  of  Russia,  may  perhaps  learn 
how  to  establish  a  new  government  devoted  to  law 
and  the  ordinary  processes  of  civilization  which  will 
be  more  progressive  and  liberal  than  the  old  re- 


SOCIALISM  OR  INDIVIDUALISM  91 

gime  of  the  Czar.  It  will  take,  however,  a  long  time 
to  accomplish  this,  because  the  Russian  peasants 
are  on  a  much  lower  plane  of  civilization  than  the 
French  peasants  of  the  French  Revolution,  and  it  is 
probable  that  they  will  go  through  a  long  period  of 
reversion  to  a  purely  peasant  nation. 

The  greatest  contribution  of  the  Bolsheviki  to 
mankind  therefore,  will  have  been  the  clear  demon- 
stration of  the  utter  impracticability  of  communism. 


CHAPTER  VL 
GENERAL  CONSIDERATIONS  AND  SUMMARY 

So  far  I  have  confined  myself  mainly  to  discuss- 
ing the  immediate  effect  of  socialism  on  the  working 
classes,  but  there  is  a  broader  and  more  general 
side  to  this  question,  in  the  ultimate  effect  of  social- 
ism on  individuality. 

The  Importance  of  Individuality. 

The  human  race  has  progressed  in  the  past  main- 
ly by  the  development  of  exceptional  individuals 
whose  genius  has  increased  our  power  over  the 
forces  of  nature. 

The  free  scope  of  individuality  is  of  the  greatest 
importance  to  the  future  progress  of  the  race. 

Any  system  therefore  which  subordinates  the  in- 
dividual to  the  state  and  makes  us  all  conform  to 
a  standard  regulation,  and  fit  nicely  in  our  respect- 
ive little  grooves,  is  bound  to  restrict  the  free  de- 
velopment of  individuality  and  is  certain  in  the  long 
run  to  diminish  the  chances  of  exceptional  genius 
being  produced.  -  This  will  ultimately  dry  up  the 
springs  of  progress.  The  higher  standard  of  living, 
higher  wages  and  the  general  distribution  of  com- 
forts among  civilized  people  are  in  a  broad  gen- 
eral sense  entirely  due  to  the  progress  of  industry 
which  in  turn  has  been  based  mainly  on  inventions 
and  discovery  by  men  of  genius.  Any  future  bet- 


SOCIALISM  OR  INDIVIDUALISM  93 

terment  in  the  condition  of  the  people  and  increase 
in  their  wages  can  only  come  about  in  the  same 
way. 

Strikes  and  fighting  about  the  relative  share  that 
shall  go  to  this  or  that  group  may  temporarily 
change  the  distribution  of  the  industrial  income,  but 
it  will  only  be  temporarv  and  will  be  more  or  less 
nullified  by  the  increased  cost  of  living. 

The  Real  Road  to  Prosperity. 

Anv  real  permanent  ^ain  will  onlv  come  bv  im- 
provements in  industrial  methods,  bv  inventions  and 
bv  the  discovery  of  new  forces  and  resources  wnich 
will  increase  production  as  a  whole  and  therefore 
the  total  national  income. 


^  therefore  which  puts  an  obstacle  in  the 
path  of  industrial  progress  is  not  going  to  ultimately 
benefit  the  masses  of  the  people. 

Yet,  strange  to  sav,  the  working  classes  have 
always  fought  against  their  best  interests  by  refusing 
to  use  labor-saving  inventions  and  sometimes  de- 
stroying them  and  interfering  with  prosperity  in 
every  way  possible,  by  strikes,  boycotts,  sabotage, 
and  inefficiency  and  curtailment  of  work  and  other 
practices. 

Wages  even  now  would  be  considerably  higher 
if  it  were  not  for  the  industrial  incapacity  of  most 
of  the  workers. 


94  SHADOW  OR  SUBSTANCE 

It  is  difficult  to  imagine  what  our  national  wealth 
would  be  if  every  worker  were  efficiently  trained 
in  a  suitable  vocation  and  honestly  did  the  best  that 
was  in  him.  I  firmly  believe  that  our  present  wages 
would  seem  small  by  comparison  with  what  they 
would  then  be. 

Private  Property  Necessary  to  Civilization. 

For  these  reasons  which  I  have  pointed  out  there 
is  now  an  almost  unanimous  agreement  among  all 
those  who  have  studied  the  question  at  all  that  any 
attempt  to  entirely  abolish  private  property  must 
prove  a  flat  failure  because  it  conflicts  with  the 
fundamental  traits  of  human  nature. 

We  now  perceive  more  clearly  than  ever  before 
that  the  love  of  self  is  yet,  as  it  always  has  been, 
the  moving  principle  of  the  immense  majority  of 
individuals  and  the  motive  that  alone  impels  them 
to  voluntary  and  sustained  exertion;  and  this  must 
be  recognized  as  the  necessary  foundation  of  every 
community,  big  or  little. 

The  desire  to  own  and  possess  material  things, 
in  short,  the  desire  for  private  property,  is  inherent 
in  most  individuals,  and  is  the  mainspring  of  civ- 
ilization; and  opportunity  for  its  gratification  must 
be  retained  in  any  social  system.  It  is  the  keystone 
of  the  arch  and  when  it  is  removed  the  whole  edi- 
fice crumbles  into  ruin.  It  is  indeed  strange  that 
anyone  should  ever  have  doubted  this  for  a  mo- 
ment. 


SOCIALISM   OR  INDIVIDUALISM  95 

Communism  a  Failure  Everywhere. 

It  is  not  alone  in  Russia  that  communism  has 
broken  down  by  itself  of  its  own  inherent  defects 
and  has  had  to  be  abandoned  even  by  its  most  fa- 
natical adherents;  the  same  has  taken  place  every- 
where else  on  this  earth  where  it  has  been  tried  on 
a  large  or  small  scale. 

Even  under  the  most  favorable  conditions,  as  in 
the  great  communistic  colony  of  Paraguay,  South 
America,  where  the  natural  resources  were  so  abun- 
dant and  accessible  that  all  human  wants  could  be 
easiW  satisfied,  communism  failed  and  had  to  be 
abandoned.  Moreover,  these  verv  same  Colonists, 
who  were  in  abiect  misery  and  privation  as  long  as 
thev  practiced  communism,  became  prosperous  and 
well  to  do  when  they  abandoned  it  and  adopted  in- 
dividualism. 

The  same  took  place  in  the  communistic 
state  established  by  Gen.  Zapata  and  his  follow- 
ers in  two  of  the  states  of  Mexico  and  the  same 
took  place  even  in  the  small  communistic  societies 
which  were  established  in  many  places  in  this  coun- 
tr>1  about  the  middle  of  the  last  century.  These 
communities  were  very  favorably  situated  and  their 
membership  was  voluntary  and  in  many  cases  was 
selected  with  some  care  to  secure  people  who  had 
the  proper  co-operative  spirit;  and  yet  they  all 
finally  proved  failures.  The  same  result  has  been 
noted  practically  everywhere  except  in  the  monas- 
tic orders,  where  the  religious  enthusiasm  of  the 


96  SHADOW  OR  SUBSTANCE 

members  and  the  severe  discipline  imposed  on  them 
by  a  hierarchy  has  been  able  to  overcome  the  in- 
herent defects  of  communism. 

Socialism  Repudiated  in  Europe  Generally. 

The  fact  is  that  socialism  is  being  repudiated 
everywhere  all  over  Europe  where  socialists  have 
been  in  power.  For  over  three  years  socialists  have 
been  in  nowe^  in  German v,  and  they  have  been 
compelled  by  the  sheer  force  of  circumstances  not 
onlv  to  re;ect  anv  further  socialization  but  also  to 
undo  m^ch  of  the  state  socialism  established  by  th** 
former  Kaiser's  government. 

The  difficulty  with  an  industry  operated  bv  the 
stpte,  is  that  it  does  not  have  to  be  a  success.  When 
it  foils  to  meet  its  expenses,  the  state  can  simply  fall 
bark  on  the  taxpavers  to  contribute  more  taxes  to  its 
maintenance.  In  this  respect  it  is  like  the  son  of  a 
rich  father  when  he  goes  into  business,  he  feels  that 
he  can  fall  back  on  the  old  man  to  help  him  out 
when  the  business  does  not  pay,  and  consequently 
he  does  not  exert  himself  to  make  it  pay  and  it 
rarely  does. 

A  private  business  is  on  a  real  competitive  basis, 
it  must  pay  or  go  broke,  and  when  it  goes  broke, 
it  has  nobody  to  fall  back  upon  and  it  simply  disap- 
pears and  makes  way  for  someone  else  who  can 
make  it  succeed. 

The  universal  poverty  of  the  Germans  brought 
about  by  the  war  compelled  the  strictest  economy  in 


SOCIALISM   OR  INDIVIDUALISM  97 

every  line  of  production  and  distribution  and  all  the 
industrial  social  and  commercial  forces  were  mobil- 
ized with  that  end  in  view.  A  commission  headed 
by  Karl  Kautsky,  the  undisputed  leader  among  the 
living  theoretical  socialists,  and  in  which  sat  the 
well-known  socialists,  Rudolph  Hilferding,  Prof. 
Emil  Lederer,  well-known  socialist  writer;  Paul  Um- 
breit,  the  chief  of  all  the  socialistic  labor  unions;  the 
formerly  rabid  socialist,  Wilbrandt,  professor  of  po- 
litical economy  at  Tubingen  University;  Otto  Hue, 
the  coal  miners*  leader,  and  Otto  Cohen,  the  social- 
ist secretary  of  the  labor  unions,  examined  the  whole 
subject  impartially  from  every  angle  and  unani- 
mously came  to  the  conclusion  that  nationalization 
was  only  the  replacement  of  one  employer,  the  cap- 
italist, by  another  employer,  the  state,  and  that  in 
actual  practice  the  state  as  an  employer  is  inefficient, 
dilatory  and  wasteful. 

Moreover,  the  commission  decided  that  if  in  the 
future  any  coal  owner  showed  more  than  ordinary 
efficiency,  he  should  be  allowed  bonuses  on  top  of 
his  profits  and  that  these  bonuses  should  not  be 
less  than  the  extra  profits  which  he  would  have 
reaped  under  free  capitalism. 

What  becomes  then  of  Marx's  famous  theory  of 
surplus  value,  the  confiscation  of  which  formed  the 
central  doctrine  of  socialism? 

Moreover,  Marx  is  now  bitterly  assailed  and  re- 
pudiated on  all  sides.  Prof.  Wildbrandt  of  Tu- 


98  SHADOW   OR  SUBSTANCE 

bingen  University,  who  only  three  years  ago  was 
rabidly  in  favor  of  the  state  owning  everything,  now 
says:  "Marx  must  be  repudiated."  And  Rudolph 
Wissell  and  Robert  Schmidt,  both  socialist  minis- 
ters of  industry,  declared  that  **the  Erfurt  program 
is  an  absurdity  and  that  the  socialist  program  must 
be  revised  in  accordance  with  real  economic  facts," 
which  means  that  Marx  must  be  repudiated. 

So  within  only  three  years,  a  complete  revision  of 
German  socialism  has  come.  The  explanation  is 
that  the  most  zealous,  most  ingenious  of  German 
socialist  statesmen  could  not  find  any  effective  sub- 
stitute for  the  incentive  to  energy  and  efficiency 
which  under  the  capitalistic  system  is  supplied  by 
the  motive  of  individual  gain. 

So  that  a  government  by  socialists,  of  socialists 
and  for  socialists  has  denationalized  and  handed 
over  to  private  management  most  of  the  complex 
state  socialistic  schemes  of  the  Hohenzollern  regime, 
the  railroads,  railroad  construction  and  repair  shops 
and  other  vestige  of  state  socialism,  and  brought 
about  the  unwilling  conversion  of  the  socialists 
themselves. 

It  is  perfectly  evident,  therefore,  that  whatever 
evils  we  may  complain  of  in  our  existing  institu- 
tions, we  cannot  hope  to  make  conditions  any  bet- 
ter by  forcibly  destroying  the  institution  of  private 
property. 


SOCIALISM  OR  INDIVIDUALISM  99 

The  Steady  Growth  of  Co-operation. 

But,  on  the  other  hand,  we  must  not  overlook 
the  fact  that  the  human  race,  from  the  earliest  pe- 
riods of  its  existence  on  this  planet,  has  been  mov- 
ing slowly  but  continuously  and  steadily  towards 
an  ever  greater  association  of  individuals  together 
for  common  purposes. 

To  find  the  genuine  simon-pure  individualist  we 
must  go  back  to  the  primitive  savage  wandering 
alone  in  the  primeval  forest.  From  thalj  time  to 
the  present  day  the  movement  away  from  extreme 
individualism  towards  an  ever  greater  development 
of  the  social  man  has  been  unceasing. 

There  has  also  existed  a  tendency  to  hold  an 
ever  increasing  amount  of  property  by  the  state  for 
the  benefit  and  use  of  its  people.  For  instance,  at 
one  time  the  highways  even  were  private  property. 
Now  they  belong  to  all  the  people  and  are  free  for 
their  use,  and  we  also  have  the  public  parks  and 
buildings,  the  recreation,  tennis,  golf,  foot  and  base- 
ball grounds,  swimming  pools,  baths,  schools,  li- 
braries, hospitals  and  many  other  forms  of  pub- 
lic property  owned  by  all  the  people  and  held  for 
their  common  use. 

Qur  endowed  colleges  and  universities  and  our 
great  charitable  foundations  are  a  species  of  semi- 
public  property  usable  by  any  citizen  under  pre- 
scribed conditions. 


100  SHADOW  OR  SUBSTANCE 

Many  of  our  fraternal  orders  in  this  country  and 
others,  such  as  the  Circulo  des  Dependientes  in 
Cuba  are  examples  of  co-operative  ownership  and 
effort,  and  they  hold  considerable  property  in  trust 
for  their  members.  Finally,  the  great  co-operative 
societies,  notably  the  Rochdale  in  England  and 
others  in  Europe,  are  magnificent  examples  of  hun- 
dreds of  millions  of  property  held  co-operatively 
and  of  hundreds  of  millions  of  business  done  yearly 
in  that  way. 

In  fact,  the  Rochdale  association  is  said  to  be 
one  of  the  largest  financial  institutions  in  the  world. 

Co-operation  Destroyed  by  Graft. 

But  co-operation  to  be  successful  must  be  volun- 
tary. Plato,  the  original  Utopian,  pointed  this  out. 
His  ideal  was  a  willing  co-operation  of  citizens  in- 
telligent enough  to  realize  its  advantages  to  them- 
selves as  well  as  to  others.  When  people  are  too 
stupid  or  perverse  to  co-operate  it  is  impossible  to 
make  them  do  it  by  force.  Force  does  not  make 
them  real  co-operators,  it  simply  converts  them  into 
slaves,  none  the  less  so  because  they  would  then  be 
the  slaves  of  a  system  rather  than  of  one  master. 

This  is  the  underlying  fallacy  in  the  program  of 
socialism.  They  preach  fluently  about  the  beauties 
and  advantages  of  the  co-operative  commonwealth 
and  how  much  better  we  would  all  be  if  we  would 
co-operate  fully  in  all  our  social  activities  and  at  the 


SOCIALISM   OR  INDIVIDUALISM  101 

same    time    they   advocate   accomplishing    this'  by 
force. 

Force  and  willing  co-operation  are  utterly  incom- 
patible. When  one  comes  in,  the  other  goes  out. 
Every  intelligent  man  fully  realizes  the  advantages 
of  co-operation  and  admits  all  that  the  socialists  say 
about  it  but  they  also  know  very  well  that  it  is  im- 
possible to  make  men  co-operate  willingly  by  force. 

Moreover  the  success  of  these  co-operations  de- 
pends entirely  on  their  being  able  to  secure  intelli- 
gent, efficient,  and  above  all,  honest  managers,  and 
this  can  only  be  done  in  a  community  where  there  is 
respect  for  and  willing  obedience  to  the  laws,  and 
this  in  turn,  ia  the  result  of  just  laws  impartially 
and  promptly  enforced. 

Such  a  condition  prevails  in  England  and  in  some 
other  European  countries.  These  societies  on  the 
other  hand  have  not  succeeded  in  this  country,  be- 
cause the  laws  have  not  been  enforced  and  our  ju- 
dicial system  has  become  undermined  with  polit- 
ical influence  and  honeycombed  with  graft,  and 
there  has  in  consequence  grown  up  a  general  dis- 
respect for  the  law  and  a  relaxation  of  the  moral 
fibre  of  the  people.  As  Henry  George  said:  **In 
a  corrupt  democracy  the  tendency  is  always  to  give 
power  to  the  worst.  Honesty  is  handicapped  and 
unscrupulousness  commands  success,  and  where 
men  are  habitually  seen  to  raise  themselves  by  cor- 
rupt qualities  from  the  lowest 'ranks  to  positions  of 


102  SHADOW   OR  SUBSTANCE 

wealth  and  power,  tolerance  ot  these  qualities  final- 
ly becomes  admiration  and  finally  corrupts  all  the 
people/'  This  is  our  condition  today.  Here  per- 
sons do  not  hesitate  to  plunder  institutions  under 
their  charge  because  they  are  sure  that  they  have 
a  good  chance  to  escape  all  punishment. 

Violence  is  Anti-Social. 

For  the  social  organism  to  function  femoothly  we 
must  have  a  considerable  development  of  the  so- 
cial qualities  in  its  citizens  and  we  must  reduce 
to  a  minimum  the  anti-social  crimes  which  are  in 
reality  a  revolt  against  the  authority  of  all  the  peo- 
ple and  their  civilization. 

Dishonesty  is  the  friction  in  the  social  mechan- 
ism and  we  cannot  hope  to  achieve  a  more  perfect 
social  condition  until  most  of  our  citizens  are  willing 
to  accept  and  obey  the  laws  which  the  composite 
state  has  made  for  the  guidance  of  all  its  members. 

It  is  the  height  of  absurdity  therefore  for  any- 
body to  expect  to  usher  in  a  higher  social  condi- 
tion by  wholesale  violence,  plunder  and  murder. 
These  crimes  will  lower  instead  of  elevating  the 
social  consciousness  of  those  who  commit  them. 

When  the  Bolsheviki  turned  loose  in  Russia  an 
orgy  of  loot,  lust,  murder  and  all  sorts  of  Crimea 
of  violence  they  were  not  traveling  towards  a  higher 
social  order,  they  were  in  reality  swiftly  sinking 
into  barbarism.  Not  the  least  of  their  crimes  was 


SOCIALISM  OR  INDIVIDUALISM  103 

the  suppression  of  highly  successful  co-operative  so- 
cieties and  the  confiscation  of  their  property,  which 
proved  conclusively  that  they  were  enemies  of  real 
progress. 

To  develop  a  higher  social  order  we  must  have 
developed  among  our  citizens  the  qualities  of  kind- 
ness, gentleness,  good  will,  honesty,  sincerity,  rev- 
erence, fraternity  and  equality.  These  qualities 
are  the  result  of  ages  of  education,  religion  and 
peaceful  development.  They  are  a  slow  evolution 
and  in  the  very  nature  of  things  they  cannot  be 
achieved  by  the  anti-social  crimes  of  violence. 

Co-operation  Will  Increase. 

With  these  reservations,  however,  it  is  reason- 
able to  suppose  that  the  age-long  tendency  of  the 
human  race  towards  an  ever  increasing  co-opera- 
tion will  continue  for  many  ages  in  the  future  and 
that  some  time  a  way  will  be  found  for  men  to  en- 
joy all  the  benefits  of  association  with  their  fellows 
without  losing  their  individual  freedom  of  action 
or  their  individuality. 

Also  that  a  way  will  be  found  for  a  very  con- 
siderable extension  of  associated  ownership  of  prop- 
erty which  will  probably  include  all  natural  re- 
sources and  monopolies  without  at  the  same  time 
interfering  with  man's  individual  freedom  to  exert 
himself  for  his  own  benefit  and  to  acquire  the  things 
he  desires  for  himself  alone. 


104  SHADOW  OR  SUBSTANCE 

Inconsistent  Rights* 

Finally,  we  must  call  attention  to  the  fact  that 
the  two  fundamental  rights  claimed  by  socialists 
are: 

1st.  The  right  of  the  laborer  to  the  full  product 
of  his  labor. 

2nd.  The  right  of  every  individual  to  subsist- 
ence. 

These  two  rights  are  inconsistent  with  and  fun- 
damentally opposed  to  each  other  and  could  not 
by  any  possibility  be  realized  at  one  and  the  same 
time.  --v^. 

If  either  one  of  these  rights  were  conceded,  it 
would  necessarily  and  immediately  involve  the  de- 
nial of  the  other  ,as  anyone  can  readily  figure  out 
for  himself.  The  right  of  the  individual  to  sub- 
sistence even  when  not  earned  temporarily  or  per- 
manently by  himself,  necessarily  involves  the  tak- 
ing away  from  others  of  a  part  of  their  production 
and  therefore  is  a  denial  of  their  right  to  the  full 
product  of  their  labor. 

Marx's  entire  contention  was  based  on  the  right 
of  the  laborer  to  the  full  product  of  his  labor.  We 
have  shown  above  that  there  is  no  practical  way 
by  which  this  can  be  accomplished  even  under  a 
communist  state.  Altho  seemingly  just  in  the  ab- 
stract, concrete  conditions  make  it  practically  im- 
possible of  complete  realization.  Every  individual 


SOCIALISM   OR   INDIVIDUALISM  105 

has  to  concede  a  small  part  of  his  rights  to  the  com- 
munity in  which  he  lives,  in  return  for  the  benefits 
and  protection  he  derives  from  his  association  with 
them.  He  also  has  to  surrender  a  part  of  his  per- 
sonal liberty,  in  order  to  accommodate  himself  to 
living  in  contact  with  his  fellow  men  in  a  settled 
community.  If  he  wishes  to  enjoy  absolute  per- 
sonal liberty  to  do  whatever  he  likes,  and  to  have 
everything  he  makes  for  himself  alone,  he  must  go 
away  by  himself  into  the  wilderness  far  away  from 
everybody  else.  The  moment  he  wishes  to  live  in 
contact  with  his  fellow  men  he  must  accommodate 
himself  to  the  equal  rights  and  equal  liberty  of  other 
human  beings  and  this  cannot  be  done  without  sur- 
rendering a  part  of  his  rights  and  liberty. 

It  is  very  strange,  however,  that  Marx  and  his 
followers  who  are  so  insistent  on  the  one  hand  in 
claiming  the  individual's  right  to  every  particle  of 
the  product  of  his  labor,  should,  on  the  other  hand, 
be  the  very  ones  who  are  advocating  the  total  sub- 
ordination of  all  the  individual's  rights  and  liberties 
to  the  state. 

In  asserting  their  fundamental  claim  of  the  in- 
dividual's right  to  the  full  product  of  his  labor  they 
are  extreme  upholders  of  the  individual's  rights  and 
therefore  extreme  individualists,  but  when  it  comes 
to  carry  out  their  theory  they  are  extreme  collectiv- 
ists  and  are  perfectly  willing  to  sacrifice  all  the  rights 
of  the  individual  to  the  welfare  of  the  state.  Incon- 
sistency could  scarcely  go  to  a  greater  length. 


106  SHADOW   OR   SUBSTANCE 

Practically  whatever  advance  has  been  made  by 
the  human  race  towards  the  recognition  of  either 
of  these  rights,  it  has  been  rather  towards  conced- 
ing the  individual's  right  to  subsistence  and  to  his 
claim  on  his  fellowmen  for  aid  in  sickness  and  dis- 
tress than  towards  the  other  one,  and  this  is  due 
to  the  growth  of  the  ideas  of  mercy,  charity,  kind- 
ness and  benevolence  among  the  masses  of  civi- 
lized people,  which  are  the  virtues  we  have  justly 
regarded  as  the  ones  advocated  principally  by  the 
Christian  religion. 

Nearly  2500  Years  Ago 

Aesop  taught  the  world  some  homely  truths  by 
means  of  his  simple  fables  which  rnnny  people 
would  do  well  to  study  again  at  the  present  time. 
In  one  of  these  he  pictured  the  strike  of  the  hands 
of  the  human  body  against  the  stomach.  He  said 
that  the  hands  became  discontented  with  their  lot 
and  said  to  one  another,  We  suffer  all  the  hard 
knocks  of  the  struggle  every  day  and  do  all  the 
work,  in  order  to  feed  the  lazy  stomach  which  does 
nothing  but  enjoy  itself  with  the  food  we  provide. 
Let  us  stop  feeding  it  and  enjoy  our  ease  like  it 
does.**  So  they  went  on  a  strike  and  refused  to 
convey  any  food  to  the  stomach.  But  in  a  day  or 
two,  the  hands  became  weak  unto  death  and  were 
glad  to  resume  feeding  the  stomach  which  they 
discovered  to  be  not  so  useless  after  all.  A  nation 
is  an  organism  to  all  intents  and  purposes  similar 
to  the  human  body.  While  its  component  parts  are 


SOCIALISM  OR  INDIVIDUALISM  107 

not  so  intimately  associated  together  as  the  parts 
of  the  human  organism,  nevertheless  they  are  suffi- 
ciently interrelated  and  dependent  on  each  other, 
tKat  one  part  of  it  cannot  destroy  the  other  without 
committing  suicide  itself. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
BERKELEY 

Return  to  desk  from  which  borrowed. 
This  book  is  DUE  on  the  last  date  stamped  below. 


ICLF  (N) 


APR121954 


LU 


•  D  LD 

DEC  18 1962 


14May'60C&l 
r - 

MAYl    196C 


LD  21-95m-ll,'50(2877sl6)476 


YB  07819 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


